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<SEC-DOCUMENT>0000950129-03-005795.txt : 20031120
<SEC-HEADER>0000950129-03-005795.hdr.sgml : 20031120
<ACCEPTANCE-DATETIME>20031120172049
ACCESSION NUMBER:		0000950129-03-005795
CONFORMED SUBMISSION TYPE:	10QSB/A
PUBLIC DOCUMENT COUNT:		21
CONFORMED PERIOD OF REPORT:	20030930
FILED AS OF DATE:		20031120

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			VERDISYS INC
		CENTRAL INDEX KEY:			0001141197
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-BUSINESS SERVICES, NEC [7389]
		IRS NUMBER:				223755993
		STATE OF INCORPORATION:			CA
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10QSB/A
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	333-64122
		FILM NUMBER:		031016134

	BUSINESS ADDRESS:	
		STREET 1:		11650 IBERIA PL SUITE 201
		CITY:			SAN DIEGO
		STATE:			CA
		ZIP:			92128
		BUSINESS PHONE:		8586181085

	MAIL ADDRESS:	
		STREET 1:		11650 IBERIA PLACE SUITE 201
		CITY:			SAN DIEGO
		STATE:			CA
		ZIP:			92128
</SEC-HEADER>
<DOCUMENT>
<TYPE>10QSB/A
<SEQUENCE>1
<FILENAME>h10836ae10qsbza.txt
<DESCRIPTION>VERDISYS, INC. - DATED 9/30/2003
<TEXT>
<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                  FORM 10-QSB/A
                                (AMENDMENT NO. 1)

     [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2003

                                       OR

     [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

               For the transition period from _______ to ________

                          COMMISSION FILE NO. 333-64122

                                 VERDISYS, INC.
                    (Exact name as specified in its charter)

                                   CALIFORNIA
         (State or other jurisdiction of incorporation or organization)

                                   22-3755993
                     (I. R. S. Employer Identification No.)


                           25025 I-45 North, Suite 525
                              The Woodlands, Texas
                         (Address of executive offices)

                                      77380
                                   (Zip Code)

                                 (281) 364-6999
              (Registrant's telephone number, including area code)

                         Reconstruction Data Group, Inc.
                      10600 N. De Anza Boulevard, Suite 250
                           Cupertino, California 95014
                                 (408) 517-3305
              (Former name, former address and former fiscal year,
                         if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] NO [ ].

As of September 30, 2003, there were 28,363,315 shares of Verdisys, Inc. Common
Stock issued and outstanding.



<PAGE>


EXPLANATORY NOTE: This Amendment No. 1 on Form 10-QSB/A ("Amended Form 10-QSB")
is being filed to amend Part I, Item 1 to include a statement disclosing the
fact that unaudited interim financial statements included in the Company's Form
10-QSB for the quarter ended September 30, 2003, as filed on November 19, 2003
("Original Form 10-QSB") were not reviewed and approved by the Company's
independent public accountants. In addition, the Company is making certain
changes to reflect a reclassification and certain typographical errors in its
financial statements and Management's Discussion and Analysis and Results of
Operations as more fully described in the Explanatory Note included in Part I,
Item 1 herein. Finally, the Company failed to file certain exhibits required to
be filed under Exhibit 10 to the Original Form 10-QSB, which are included in
this Amended Form 10-QSB.

This Amended Form 10-QSB (1) files Part I, Items 1 and 2 in its entirety to add
an Explanatory Note and to make certain changes to the financial statements
described in the Explanatory Note included in Part I, Item 1 herein and (2)
amends in its entirety Part II, Item 6 of the Original Form 10-QSB. This Amended
Form 10-QSB also files all of the exhibits included in the exhibit list in Part
II, Item 6 that were not filed in the Original Form 10-QSB. This Amended Form
10-QSB speaks as of the filing date of the Original Form 10-QSB, except for the
certifications which speak as of their respective dates and the filing date of
the Amended Form 10-QSB. Except as specifically indicated, the Amended Form
10-QSB does not reflect any events occurring subsequent to the filing of the
Original Form 10-QSB.

<PAGE>


PART I

ITEM 1.  FINANCIAL STATEMENTS

EXPLANATORY NOTE

Malone & Bailey, PLLC, the Company's independent public accountants, informed
the Company that, at the time of the filing of the Original Form 10-QSB, it did
not agree with the recognition of certain revenue as presented in the Company's
unaudited interim financial statements without a review of certain documentation
requested by Malone & Bailey. The Company was not able to provide the requested
documentation to Malone & Bailey prior to the extended filing deadline for the
Original Form 10-QSB. As a result, the Company's independent accountants have
not completed their review and approval of the unaudited interim financial
statements and notes thereto included in this Amended Form 10-QSB in accordance
with Rule 310(b) of Regulation S-B promulgated under the Securities and Exchange
Act of 1934 ("Exchange Act"). The Company believes that the unaudited financial
statements and notes to the consolidated financial statements included therein
contain all of the information and necessary adjustments for a fair presentation
of these financial statements and accompanying notes. In addition to the above,
in this Amended Form 10-QSB, the Company is reclassifying a $200,000 credit from
trade receivables to deferred revenue in its September 30, 2003 condensed
balance sheet (and the related entries in the condensed statements of cash flows
for the nine months ended September 30, 2003). The Company is also correcting a
typographical error in the amortization of license expense of $30 in its
condensed statements of operations for the nine months ended September 30, 2003.
Neither of these changes has any impact on net income for any period. Finally,
the Company is also making certain changes to its Management's Discussion &
Analysis of Financial Condition and Results of Operations to correct certain
typographical errors. The Company anticipates amending this Form 10-QSB when the
independent accountants' review is complete.


<PAGE>



                                 VERDISYS, INC.
                   (Formerly, Reconstruction Data Group, Inc.)

                             CONDENSED BALANCE SHEET

                                     ASSETS


<Table>
<Caption>

                                                                  SEPTEMBER 30, 2003  DECEMBER 31, 2002
                                                                       Unaudited
<S>                                                               <C>                 <C>
Current assets:
   Cash                                                               $    200,501      $        135
   Trade receivable                                                      1,775,236            10,402
   Trade receivable - related party (Note 4)                               337,500                --
   Employee advances                                                            --            42,620
   Other current assets                                                     25,468                --
                                                                      ------------      ------------
         Total current assets                                            2,338,705            53,157
Equipment, net of accumulated depreciation of $43,153
     and $41,833                                                           411,280             3,755
License, net of accumulated amortization of  $114,585
     and 0 (Note 5)                                                      4,917,528                --
                                                                      ------------      ------------
Total assets                                                          $  7,667,513      $     56,912
                                                                      ============      ============

                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities:
   Accounts payable                                                   $    294,763      $  1,562,339
   Accrued expenses                                                        910,186           905,461
   Note payable to stockholders (Note 5)                                 2,224,510         1,579,562
   Deferred revenue                                                        575,884            56,180
                                                                      ------------      ------------
         Total current liabilities                                       4,005,343         4,103,542
Long-term debt:
   Deferred revenue                                                             --            80,367
                                                                      ------------      ------------
Total liabilities                                                        4,005,343         4,183,909
                                                                      ------------      ------------
Commitments and contingencies                                                   --                --

Stockholders' equity:
   Common stock, $0.001 par value, 50,000,000 and 14,963,139
      authorized, 28,363,615 and 14,963,139 issued and outstanding
      restated to give effect of the merger                                 28,364            14,963
   Additional paid-in capital                                           15,865,134         6,802,514
   Retained earnings                                                   (12,231,328)      (10,944,474)
                                                                      ------------      ------------
         Total stockholders' equity (deficit)                            3,662,170        (4,126,997)
                                                                      ------------      ------------
Total Liabilities and Stockholders' Equity                            $  7,667,513      $     56,912
                                                                      ============      ============
</Table>

         The accompanying notes are an integral part of these condensed
                             financial statements.



<PAGE>

                                 VERDISYS, INC.
                   (Formerly, Reconstruction Data Group, Inc.)

                       CONDENSED STATEMENTS OF OPERATIONS
                                   (Unaudited)

<Table>
<Caption>

                                                Three Months Ended                  Nine Months Ended
                                                   September 30,                      September 30,
                                              2003              2002              2003             2002
                                          ------------      ------------      ------------      ------------
<S>                                       <C>               <C>               <C>               <C>
Revenues:                                 $  2,094,612      $     20,509      $  2,627,959      $    227,332

Cost and expenses:
   Cost of goods sold                          775,278            28,107         1,138,260           225,562
   Selling, general & administrative           815,722           581,992         2,003,414         1,445,467
   Amortization of license                      61,638             3,587           107,472             8,477
                                          ------------      ------------      ------------      ------------
   Operating income (loss)                     441,974          (593,177)         (621,187)       (1,452,174)

Other (income) expense:
   Bad debts                                    19,999                --            19,999                --
   Debt forgiveness                            (61,653)               --          (521,887)               --
   Impairment expense                               --                --         1,000,000                --
   Interest expense                             59,217            38,926           156,055           101,804
                                          ------------      ------------      ------------      ------------

     Net income (loss)                    $    424,411      $   (632,103)     $ (1,275,354)     $ (1,553,978)
                                          ============      ============      ============      ============

Basic income (loss) per share             $       0.02      $      (0.05)     $      (0.06)     $      (0.11)
                                          ============      ============      ============      ============

Fully diluted income (loss) per share     $       0.01                --                --                --

Basic weighted average
   common shares outstanding                26,783,077        13,553,139        21,491,391        13,553,139
                                          ============      ============      ============      ============

Fully diluted weighted average
    common shares outstanding               34,893,910                --                --                --
</Table>


         The accompanying notes are an integral part of these condensed
                             financial statements.




<PAGE>

                                 VERDISYS, INC.
                   (Formerly, Reconstruction Data Group, Inc.)

                       CONDENSED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<Table>
<Caption>

                                                                Nine Months Ended
                                                          September 30,   September 30,
                                                              2003             2002
                                                          ------------    -------------
<S>                                                       <C>             <C>

Cash flows from operating activities:
   Net loss                                                $(1,275,354)     $(1,553,978)
Adjustments to reconcile net loss to net cash provided
    by (used in) operating activities
Issuance of options and warrants for services                       --          353,709
Depreciation and amortization                                  108,792            8,477
Impairment expense                                           1,000,000               --
Gain on debt restructuring                                    (521,888)              --
Shares issued for services                                     326,329               --
Option expense                                                 810,935               --
Changes in:
   Trade receivable                                         (1,764,834)          41,510
   Trade receivable - related parties                         (337,500)              --
   Other current assets                                         17,152           (9,500)
   Accounts payable                                            (86,021)         100,758
   Accrued expenses                                            311,353          570,639
   Deferred revenue                                            439,337          115,730

Net cash used in operating activities                      $  (971,699)     $  (372,655)
                                                          ------------    -------------

Cash flows from investing activities:
   Cash payments for license                                  (100,000)              --
   Purchases of equipment                                     (408,846)          (5,286)
                                                          ------------    -------------

Net cash used in investing activities                         (508,846)          (5,286)
                                                         -------------   --------------

Cash flows from financing activities:
   Payments on the bridge debt                                 (50,894)              --
   Payments on notes payable                                  (379,596)              --
   Payments on convertible notes                              (105,000)
   Proceeds from the exercises of warrants                     234,251
   Proceeds from the sale of preferred stock                 1,982,150          380,000
                                                         -------------   --------------
Net cash provided by financing activities                    1,680,911          380,000
                                                         -------------   --------------

       Net change in cash                                      200,366            2,059

Cash, beginning of period                                  $       135      $     3,397
                                                         -------------   --------------

Cash, end of period                                        $   200,501      $     5,456
                                                         =============   ==============
</Table>

         The accompanying notes are an integral part of these condensed
                             financial statements.



<PAGE>

                                 VERDISYS, INC.
                   (Formerly, Reconstruction Data Group, Inc.)

                                 VERDISYS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                   (Unaudited)

NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION

Reconstruction Data Group, Inc. ("RDGI") and Verdisys, Inc.("Verdisys") entered
into an Agreement and Plan of Merger on April 24,2003, as amended, which was
effective as of July 18, 2003. Prior to the merger the authorized capital stock
of RDGI consisted of 50,000,000 shares of RDGI common stock, $.001 par value, of
which approximately 3,651,500 shares of common stock were outstanding.
Immediately prior to closing, RDGI cancelled 2,151,500 shares of common stock,
which included 1,485,000 shares of common stock previously owned by the
president of RDGI, in exchange for 100% of RDGI's ownership, rights, interest
and liabilities in ARC Network. The ARC Network represented all the operations
of RDGI immediately prior to the merger.

Prior to the consummation of the merger, the authorized capital stock of
Verdisys consisted of 40,000,000 shares of Verdisys common stock, and 60,000,000
shares of preferred stock, no par value, of which 17,935,137 shares of common
stock were outstanding. Immediately prior to the merger, Verdisys, Inc. changed
its name to Verdisys Operations Corporation and RDGI changed its name to
Verdisys, Inc.

Upon consummation of the merger, Verdisys, Inc. issued 25,202,539 newly issued,
restricted common shares. Each share of common stock of Verdisys Operation
Corporation was converted into and exchanged into one share of restricted common
stock of Verdisys, Inc., except shares held in treasury which were cancelled.
Following the closing, Verdisys, Inc. remained the surviving corporation with
26,702,539 shares outstanding. The following table reconciles the number of
shares of common stock issued and outstanding immediately prior to consummation
of the merger to the number of shares of common stock issued and outstanding
immediately following consummation of the merger.

<Table>
<S>                                                    <C>           <C>
    RDGI shares just prior to the merger                              3,651,500
    Shares cancelled:
        Shares owned by President                      1,485,000
        Shares owned by other founder                    666,500     (2,151,500)
                                                                     ----------
    RDGI shares prior to share issuance                               1,500,000
    Newly issued shares for the share exchange                       25,202,539
                                                                     ----------
    Verdisys shares outstanding immediately after
        merger                                                       26,702,539
</Table>

The accompanying unaudited interim financial statements of Verdisys have been
prepared in accordance with accounting principles generally accepted in the
United States of America and the rules of the Securities and Exchange Commission
("SEC"), and should be read in conjunction with the audited financial statements
and notes thereto contained in Verdisys' Annual Report filed with the SEC on
Form 8-K, Amendment No. 1 filed on September 29, 2003, amending a Form 8-K
initially filed on July 18, 2003. The merger has been accounted for as a reverse
acquisition. The condensed statement of operations presented for the three and
nine months ended September 30, 2003 and 2002 include the historical results of
Verdisys prior to the merger for each of the periods presented. Earnings per
share for periods prior to the merger are restated to reflect the number of
equivalent shares received. Historical stockholders' equity of Verdisys is
retroactively restated for the equivalent number of shares received in the
merger after giving effect to the difference in par value of the issuer's and
acquirer's stock with an offset to paid-in capital. Retained earnings (deficit)
has been carried forward after the merger.

In the opinion of management, all adjustments, consisting of normal recurring
adjustments, necessary for a fair presentation of financial position and the
results of operations for the interim periods presented have been reflected
herein. The results of operations for the interim periods are not necessarily
indicative of the results to be expected for the full year. Notes to the
financial statements which would substantially duplicate the disclosure
contained in the audited financial statements for 2002 as reported in the 8-KA
have been omitted.



<PAGE>
                                 VERDISYS, INC.
                   (Formerly, Reconstruction Data Group, Inc.)


Certain amounts in financial statements of prior years have been reclassified to
conform to the presentation of the current year for comparative purposes. Those
reclassifications did not affect consolidated net income for the years
presented.

In December 2002, the Financial Accounting Standards Board ("FASB") issued SFAS
148, "Accounting for Stock-Based Compensation - Transition and Disclosure" (SFAS
148). This pronouncement provides alternative methods of transition for a
voluntary change to the fair value based method of accounting for stock-based
employee compensation. Under the fair value based method, compensation cost for
stock options is measured when options are issued. In addition, SFAS 148 amends
the disclosure requirements of SFAS 123 to require more prominent and more
frequent disclosures in financial statements of the effects of stock-based
compensation.

The transition guidance and annual disclosure provisions of SFAS 148 are
effective for fiscal years ending after December 15, 2002, with earlier
application permitted in certain circumstances. Verdisys has adopted SFAS 148 as
of December 31, 2002 through continued application of the intrinsic value method
of accounting under APB 25, and enhanced financial statement disclosures of the
effect on net income and earnings per share of fair value provisions as if SFAS
148 had been applied.

Verdisys accounts for non-cash stock based compensation issued to non-employees
in accordance with the provisions of SFAS No. 123 and EITF No. 96-18,
"Accounting for Equity Investments That Are Issued to Non-Employees for
Acquiring, or in Conjunction with Selling Goods or Services". Common stock
issued to non-employees and consultants is based upon the value of the services
received or the quoted market price, whichever value is more readily
determinable. Verdisys accounts for stock options and warrants issued to
employees under the intrinsic value method. Under this method, Verdisys
recognizes no compensation expense for stock options or warrants granted when
the number of underlying shares is known and the exercise price of the option or
warrant is greater than or equal to the fair market value of the stock on the
date of grant.

The following table illustrates the effect on net loss and net loss per share if
Verdisys had applied the fair value provisions of SFAS No. 123.

<Table>
<Caption>


                                                                    2003
                                                Three Months Ended     Nine Months Ended
<S>                                                <C>                     <C>
Net income (loss) as reported                          $   424,411           $(1,275,354)
Less: stock based compensation determined
         Under fair valued-based method                    299,008               299,008
                                                       -----------           -----------
Pro Forma net income (loss)                            $   125,403           $(1,574,362)
                                                       ===========           ===========

Basic net income (loss) per common share:
         As reported                                   $      0.02           $     (0.06)
         Pro forma                                     $        --           $     (0.07)

Diluted net income (loss) per common share:
         As reported                                   $      0.01           $        --
         Pro forma                                     $        --           $        --
</Table>


The weighted average fair value of the stock options granted during third
quarter 2003 and third quarter 2002 was $410,000 and --, respectively. Variables
used in the Black-Scholes options-pricing model include (1) 5.0% risk-free
interest rate, (2)expected option life is the actual remaining life of the
options as of each year end, (3) expected volatility is zero, and (4) zero
expected dividends.

NOTE 2 - PRIVATE PLACEMENT

In July and August 2003, Verdisys sold 609,000 shares of common stock at $2.00
per share in a private placement for total proceeds of $1,218,000 and fees
consisted of 39,400 shares of restricted common stock and 9,501 warrants.




<PAGE>
                                 VERDISYS, INC.
                   (Formerly, Reconstruction Data Group, Inc.)


In connection with the offerings as described above, Verdisys issued 9,501
warrants for the purchase of common stock at a price of $2.00 per share to
certain partners of the placement agent that assisted with the offering. The
warrants may be exercised at any time prior to September 5, 2008 by paying cash
at the warrant price, prior to a registration statement such warrants may be
exercised by surrendering such number of shares of common stock received upon
exercise of the warrants with a current market price equal to the warrant price.

NOTE 3 - DEBT FORGIVENESS INCOME

During the three and nine months ended September 30, 2003, Verdisys negotiated
settlements of accounts payable Verdisys recorded debt forgiveness of $61,653
and $521,888 for the three and nine months ended September 30, 2003,
respectively.

NOTE 4 - RELATED PARTY

In April 2003, Verdisys signed a drilling service contracts with Energy 2000
NGC, Inc. of Louisiana ("Energy 2000"), whereby Energy 2000 will pay Verdisys a
minimum of $1,800,000 for lateral drilling of 45 wells. This contract is a fixed
fee contract with the total price depending on the number of wells drilled and
offshoot lateral bores drilled. In addition, Verdisys will receive an 80 percent
interest in the net operating income after payback from these properties and
will also be reimbursed for 20 percent of its field costs. In September, 2003
Verdisys entered into another contract with E2000 for an additional 57 wells
with terms similar to the original contract.

Energy 2000 is a related party. Energy 2000 is a wholly owned subsidiary of Berg
McAfee Companies for which Eric McAfee, a director of Verdisys, has a 50%
ownership. Mr. McAfee has a 0.4% direct ownership of Verdisys and Berg McAfee
Companies has a 29.6% ownership in Verdisys, and Clyde Berg, the co-owner of
Berg McAfee Companies, owns 1.3% of Verdisys; therefore, Mr. McAfee and Mr. Berg
have a total beneficial ownership of 31.3% in Verdisys.

Verdisys has recognized revenues of $107,500 and $0 for the three months ended
September 30, 2003 and September 30, 2002, respectively, relating to Energy
2000. Verdisys has eliminated revenue of $33,712 for the three months ended
September 30, 2003 for the related party ownership portion of Mr. McAfee and Mr.
Berg. Accounts receivable related to Energy 2000 is $237,500 at September 30,
2003.

The Chairman of the Board of Verdisys is employed by Texas A&M University. The
Company recorded $0 and $20,380 of revenue from a contract with Texas A&M for
the three and nine-months ended September 30, 2003, respectively.

NOTE 5 - LICENSE AND RELATED NOTES PAYABLE

In April 2003, an individual licensed his lateral drilling technology and
equipment to Verdisys. Verdisys agreed to pay $2,750,000 plus 10 percent of
related gross revenues from drilling operations. Verdisys paid $100,000 upon
signing and entered into a note agreement for $2,650,000 plus 8 percent interest
to be paid from May 2003 through March 2004.

In July 2003, Verdisys issued 125,000 restricted shares to the individual in
exchange for a $250,000 reduction of the note payable. During the quarter,
certain provisions of the licensing agreement were amended to issuance of
500,000 shares of restricted stock and the grant of a board seat in exchange for
elimination of the 10% royalty and agreement to pay $500 per well drilled. The
stock price at the time of issuance was $4.55 per share. Verdisys accounted for
the transaction as an increase in license and stockholders' equity of
$2,275,000.

At September 30, 2003 the gross balance of the license was $5,025,000 and
accumulated amortization was $114,585 and is being amortized over the remaining
life of the patent, 14 years. The balance of the note payable at September
30,2003 was $2,020,404. Interest expense of $67,290 and $120,404 was recognized
for the three and nine-months ended September 30, 2003.



<PAGE>
                                 VERDISYS, INC.
                   (Formerly, Reconstruction Data Group, Inc.)


NOTE 6 - CONCENTRATION OF CREDIT RISK

Verdisys has a concentration of credit risk related to one customer which
accounted for 92% of the total revenues for the three months ended September 30,
2003. To mitigate this risk, the Company performs ongoing credit evaluations of
its customers and at time requires collateral in support of its trade
receivables. Verdisys also has legal rights to claims against the producing
properties held by the customer. As of September 30,2003, accounts receivable
from this customer total of approximately $1.7 million. Management of the
Company believes such amount is realizable.

NOTE 7 - EQUIPMENT

The Company recorded a $340,000 increase in equipment related to the purchase of
2 drilling rigs. Depreciated expense for the rigs is computed on a straight-line
basis over a period of 5 to 7 years. There is no depreciation expense for the
quarter related to the rigs as the rigs were acquired at the end of the quarter.

NOTE 8 - NON-CASH TRANSACTIONS


The following table contains non-cash information for the nine months ended
September 30, 2003:

<Table>

<S>                                                          <C>
Purchase of license for note payable (see note 5)            $2,650,000

Stock issued for note payable (see note 5)                   $  250,000

Stock issued for amendment to license (see note 5)           $2,275,000

Warrants issued for accounts payable                         $   95,000

Contributions to capital for restructuring                   $  548,000

Issuances of equity for bridge debt                          $  590,000

Stock issued for convertible notes                           $  506,004
</Table>

NOTE 9 -RECENT ACCOUNTING PRONOUNCEMENTS

The FASB issued SFAS 150 -"Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity" (SFAS 150). SFAS 150 establishes
standards for how an issuer classifies and measures certain financial
instruments that is within its scope as a liability or an asset in some
circumstances. The adoption of SFAS 150 as of July 1, 2003 did not have a
material impact on Verdisys' financial position or results of operations.

NOTE 10 - COMMITMENTS AND CONTINGENCIES

In January 2003, the FASB released Interpretation No. 45 "Guarantor's Accounting
and Disclosure Requirements for Guarantees, Including Guarantees of Indebtedness
of Others" (FIN 45). FIN 45 requires the disclosure in the financial statements
footnotes of the nature of guarantees and the maximum potential amount of future
payments that could be required of the guarantor. Footnote disclosures are
required for guarantees and indemnification agreements Verdisys issues beginning
in year-end financial statements ending after December 15, 2002. FIN 45 also
includes liability recognition and measurement provisions that apply
prospectively to guarantees issued or modified after December 31, 2002. As of
September 30, 2003, no liabilities have been recorded. See footnote 12 for
further disclosure.

Verdisys is involved in litigation arising in the normal course of business.
Management believes the ultimate resolution of that litigation will not have a
material adverse effect on the financial statements.


<PAGE>

                                 VERDISYS, INC.
                   (Formerly, Reconstruction Data Group, Inc.)


NOTE 11 - EARNINGS PER COMMON SHARE

Basic earnings per common share are computed by dividing income available to
common stockholders by the weighted average number of common shares outstanding
for the period. Diluted earnings per common share reflect the potential dilution
that could occur when potential common shares are added to common shares
outstanding. Diluted earnings per common share are calculated quarterly, and the
number of incremental shares to be included at year end is the weighted average
of each quarterly calculation. Fully diluted earnings per share are not
presented for the nine months ended September 30, 2003 and the nine months ended
September 30, 2002, as fully dilutive earnings per share would be anti-dilutive
due to the losses in those periods.

NOTE 12 - SUBSEQUENT EVENTS

In October, Verdisys issued 833,333 shares of common stock, at a price of $6.00
per share for a total purchase price of $5,000,000 to Gryphon Master Fund, L.P.
Proceeds from the offering were used to pay stock issuance costs of $420,000,
83,334 warrants at $6 per share that expire October 24, 2008 and 20,000 shares
of restricted common stock. The warrants maybe exercised at any time prior to
October 24, 2008 by paying cash at the warrant price, prior to a registration
statement such warrants may be exercised, by surrendering such number of shares
of common stock received upon exercise of the warrants with a current market
price equal to the warrant price. If the Company fails to meet certain
milestones related to registration of such shares, Verdisys shall pay liquidated
damages equal to 1% of the purchase price of the shares paid for the first 30
days the event is not cured and 2 percent of the purchase price paid for each
thirty day period thereafter until cured. In no event shall Verdisys be required
to pay more than aggregate liquidated damages of 8% of the purchase price or
$400,000. In addition, if the 30 day average closing price of Verdisys, Inc.
common stock drops, such drops could result in the issuance of a maximum of
277,778 additional shares of common stock for no additional compensation. If
this occurs, a total of 1,111,111 common shares will have been issued for a
price of $4.50 per share. The maximum exposure under these two provisions total
$1,250,000.

In October 2003, Verdisys amended certain provisions of its contract with its
major customer. Under the provisions of the amendment, Verdisys shall refund to
its customer $200,000 if delivery of certain leases to customer does not occur.

In November 2003, the Company signed an option to purchase a large natural gas
field with significant current gas production for a specified time period. The
option required the Company to pay a non-refundable deposit of $500,000 and has
incurred fees to date of $120,000 associated with the transaction.




<PAGE>
                                 VERDISYS, INC.
                   (Formerly, Reconstruction Data Group, Inc.)

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF
OPERATIONS

This statement may include projections of future results and "forward looking
statements" as that term is defined in Section 27A of the Securities Act of 1933
as amended (the "Securities Act"), and Section 21E of the Securities Exchange
Act of 1934 as amended (the "Exchange Act"). All statements that are included in
this Quarterly Report, other than statements of historical fact, are forward
looking statements. Although management believes that the expectations reflected
in these forward looking statements are reasonable, it can give no assurance
that such expectations will prove to have been correct.

Management Discussion

Headquartered in The Woodlands, Texas, Verdisys, Inc. (Verdisys or the Company)
provides proprietary oil services and solutions for Energy Production
Enhancement including patented Lateral Drilling Technologies and secure
Satellite Communications.

Verdisys was incorporated in the State of California as Rocker & Spike
Entertainment, Inc. on September 27, 2000. Until December 31, 2000, operations
consisted of organizational matters, the sale of no par value common stock, and
the search for an operating company with which to perform a merger or
acquisition. Effective January 1, 2001, Rocker & Spike Entertainment, Inc.
purchased the assets and web domain of Accident Reconstruction Communications
Network, a sole proprietorship, from the sole proprietor. Following the
acquisition, the company changed its name from Rocker & Spike Entertainment,
Inc. to Reconstruction Data Group, Inc. effective March 19, 2001.

Reconstruction Data Group, Inc. ("RDGI") and Verdisys, Inc.("Verdisys") entered
into an Agreement and Plan of Merger on April 24,2003, as amended, which was
effective as of July 18, 2003. Prior to the merger, the authorized capital stock
of RDGI consisted of 50,000,000 shares of RDGI common stock, $.001 par value, of
which approximately 3,651,500 shares of common stock were outstanding.
Immediately prior to closing, RDGI cancelled 2,151,500 shares of common stock,
which included 1,485,000 shares of common stock previously owned by the
president of RDGI, in exchange for 100% of RDGI's ownership, rights, interest
and liabilities in ARC Network. The ARC Network represented all the operations
of RDGI immediately prior to the merger.

Prior to the Consummation of the merger, the authorized capital stock of
Verdisys consisted of 40,000,000 shares of Verdisys common stock, and 60,000,000
shares of preferred stock, no par value, of which 17,935,137 shares of common
stock were outstanding. Immediately prior to the merger, Verdisys, Inc. changed
its name to Verdisys Operations Corporation and RDGI changed its name to
Verdisys, Inc.



<PAGE>

                                 VERDISYS, INC.
                   (Formerly, Reconstruction Data Group, Inc.)

         Upon consummation of the merger, Verdisys, Inc. issued 25,202,539 newly
issued, restricted common shares. Each share of common stock of Verdisys
Operation Corporation was converted into and exchanged into one share of
restricted common stock of Verdisys, Inc., except shares held in treasury which
were cancelled. Following the closing, Verdisys, Inc. remained the surviving
corporation with 26,702,539 shares outstanding. The following table reconciles
the number of shares of common stock issued and outstanding immediately prior to
consummation of the merger to the number of shares of common stock issued and
outstanding immediately following consummation of the merger.

<Table>
<S>                                                                 <C>
RDGI shares just prior to the merger                                  3,651,500
Shares cancelled:
    Shares owned by President                     1,485,000
    Shares owned by other founder                   666,500          (2,151,500)
                                                                     ----------
RDGI shares prior to share issuance                                   1,500,000
Newly issued shares for the share exchange                           25,202,539
                                                                     ----------
Verdisys shares outstanding immediately after
    merger                                                           26,702,539
</Table>

Financial Summary

Three Months Ended September 30, 2003 Compared to Three Months Ended September
30, 2002

Verdisys earned $2,094,612 in revenues and $424,411 in operating income for
the quarter ended September 30, 2003 as compared to revenues of $20,509 and an
operating loss of $632,103 for the quarter ended September 30, 2002. The
significant increase in revenues and operating income for the three months ended
September 30, 2003 was due to lateral drilling services utilizing the Landers
lateral drilling technology for the first full quarter. There were no comparable
revenues in 2002 as the license to the Landers lateral drilling technology was
acquired in April 2003.

Revenues

Lateral Drilling Services

Lateral Drilling Services' revenues were $2,060,788 and $0 for the three months
ended September 30, 2003 and three months ended September 30, 2002,
respectively. During the quarter, 31 wells were drilled with Verdisys'
proprietary drilling rigs under the Edge Capital Group ("Edge") initial
contract for the Monroe field. In addition to the fee for drilling services,
Verdisys shall receive a 66 2/3% interest in the net operating income from
Edge's portion of the properties' income (the "Verdisys Royalty") after Edge has
fully recovered all drilling service fees and related expenses incurred for all
wells drilled as part of the contract. The Verdisys Royalty will be calculated
as 66 2/3% of the net lease after recovery by Edge (and/or its third party
financing sources) of Edge's costs related to the drilling services, including
principal, interest, fees and costs for financing such drilling services; cost
of acquisition of the lease; land owner royalties or other royalties to third
parties other than Edge or Verdisys; and field operating costs. Therefore, after
completion of the re-development of the field, Edge will secure for Verdisys a
66 2/3% listing with the gatherer for direct payment of proceeds. It is not
anticipated that Verdisys will receive any royalties until late 2004 or later.
In addition during the quarter, the Company signed a second contract with Edge
for drilling services for 100 wells associated with the Franklin field.

During the quarter, two wells were drilled by Verdisys in accordance with the
Energy 2000 NGC, Inc.'s (E2000) agreement, and 4 wells during the second quarter
2003. E2000 is a wholly owned subsidiary of Berg McAfee Companies for which Eric
McAfee, a director of Verdisys, has a 50% ownership. Mr. McAfee has a 0.4%
direct ownership of Verdisys and Berg McAfee Companies has a 29.6% ownership in
Verdisys, and Clyde Berg, the co-owner of Berg McAfee Companies, owns 1.3% of
Verdisys; therefore, Mr. McAfee and Mr. Berg have a total beneficial ownership
of 31.3% in Verdisys. Verdisys has recognized revenues of $107,500 and $0 for
the three months ended September 30, 2003 and September 30, 2002, respectively,
relating to E2000. Verdisys has eliminated revenue of $33,712 for the three
months ended September 30, 2003 for the prorated related party prorate portion
of ownership by Mr. McAfee and Mr. Berg. To date, E2000 paid $160,000 under the
contracts, $100,000 of which was received in October 2003.





<PAGE>


                                 VERDISYS, INC.
                   (Formerly, Reconstruction Data Group, Inc.)

Accounts receivable related E2000 is $337,500 at September 30, 2003. In addition
to the fee for drilling services, Verdisys shall receive an 80% interest in the
net operating income from E2000's portion of the properties' income (the
"Verdisys Royalty") after E2000 has fully recovered all drilling service fees
and related expenses incurred for all wells drilled as part of the contract. The
Verdisys Royalty will be calculated as 80% of the net lease after recovery by
Edge and/or its third party financing sources of E2000's costs related to the
drilling services, including principal, interest, fees and costs for financing
such drilling services; cost of acquisition of the lease; land owner royalties
or other royalties to third parties other than E2000 or Verdisys; and field
operating costs. Therefore, after completion of the re-development of the field,
E2000 will secure for Verdisys an 80% listing with the gatherer for direct
payment of proceeds. It is not anticipated that Verdisys will receive any
royalties until late 2004 or later.

During the quarter, the Company amended its lateral drilling license agreement
with Mr. Landers. In July 2003, Verdisys exchanged 125,000 shares of Verdisys
restricted common stock for reduction of a $250,000 note payable to Mr. Landers.
In August 2003, Mr. Landers agreed to retroactively eliminate the royalty fees
of 10% of the net revenues on Verdisys' lateral drilling, in exchange for
500,000 shares of restricted common stock of Verdisys plus a $500 flat fee per
well drilled. Mr. Landers agreed to amend the term of the license to the
expiration date associated with the patents to the lateral drilling technology.
The Company capitalized $2,275,000 associated with the 500,000 shares issued and
is amortizing the amounts associated with the license over a period of 14 years.

Satellite Communications Services

Satellite Communication Services' revenues for the third quarter ended September
30, 2003 were $33,824. Revenues were down for the current quarter as compared to
the prior 2003 quarter due to the nature of the services provided. As hardware
is sold, Verdisys recognizes the revenue in the period it is delivered to the
customer. The bandwidth revenue is amortized over the period benefited. Cash
collected for bandwidth is recorded as deferred revenue. At September 30, 2003
there was $251,228 reflected in the condensed balance sheet as deferred revenue
relating to Satellite Communications.

Operating Income

The operating income for the third quarter ended 2003 improved substantially due
to the high gross margins realized from the lateral drilling services.

Nine Months Ended September 30, 2003 Compared to Nine Months Ended September 30,
2002

Verdisys earned $2,627,959 in revenues and an operating loss of $621,187 for the
nine months ended September 30, 2003 as compared to revenues of $227,332 and an
operating loss of $1,452,174 for the nine months ended September 30, 2002. The
significant increase in revenues and reduction in operating loss for the nine
months ended September 30, 2003 was due primarily to lateral drilling services
provided utilizing the Landers lateral drilling technology. There were no
comparable revenues for the comparable nine month period in 2002 as the license
to the Landers lateral drilling technology was acquired in April 2003.

Revenues

Lateral Drilling Services' revenues for the nine months ended September 30, 2003
were $2,259,844.

Satellite Communication Services' revenues for the nine months ended September
30, 2003 were $368,115. Revenues increased due to the increase in contracts to
provide satellite communication services.

Backlog

To date the Company has signed contracts to drill 464 wells and had drilled and
completed 37 wells as of September 30, 2003. Of the 464 wells under contract 318
wells are related to Edge's contracts, 102 wells



<PAGE>
                                 VERDISYS, INC.
                   (Formerly, Reconstruction Data Group, Inc.)

are related E2000's contract and 44 wells are related to Natural Gas Systems,
Inc., of which Mr. McAfee and Mr. Berg and other affiliates have a 28.6%
beneficial ownership.

Liquidity and Capital Resources

Capital Expenditures

The Company utilized two drilling rigs owned and operated by Mr. Landers and his
affiliates during the current quarter. The Company took delivery of two in late
September. The completion of two additional rigs in November and three expected
in December brings the company's total rig fleet to nine which is expected to
cost the company approximately $1.6 million.

Liquidity

In July and August, Verdisys sold 609,000 shares of common stock at $2.00 per
share in a private placement for total proceeds of $1,218,000 and fees consisted
of 39,400 shares of restricted common stock and 9,501 warrants.

In connection with the offering, Verdisys issued 9,501 warrants for the purchase
of common stock at a price of $2.00 per share to certain partners of the
investment bank that assisted with the offering. The warrants may be exercised
at any time prior to September 5, 2008, by paying cash at the warrant price.
Prior to a registration statement such warrants may be exercised by surrendering
such number of shares of common stock received upon exercise of the warrants
with a current market price equal to the warrant price.

In October, Verdisys issued 833,333 shares of common stock, at a price of $6.00
per share for a total purchase price of $5,000,000 to Gryphon Master Fund, L.P.
Proceeds from the offering were used to pay stock issuance costs of $420,000,
83,334 warrants at $6 per share that expire October 24, 2008 and 20,000 shares
of restricted common stock. The warrants maybe exercised at any time prior to
October 24, 2008 by paying cash at the warrant price. Prior to a registration
statement such warrants may be exercised. If a registration statement to
register such shares does not occur within a specified time period, Verdisys
shall pay liquidated damages equal to 1% of the purchase price of the shares
paid for the first 30 days the event is not cured and 2 percent of the purchase
price paid for each thirty day period thereafter until cured. In no event shall
Verdisys be required to pay aggregate liquidated damages of 8% of the purchase
price or $400,000. In addition, if the 30 day average closing price of Verdisys,
Inc. common stock drops, such drops could result in the issuance of a maximum of
277,778 additional shares of common stock for no additional compensation. If
this occurs, a total of 1,111,111 common shares will have been issued for a
price of $4.50 per share. The maximum exposure under these two provisions total
$1,250,000. The purpose of this offering was to provide additional operating
capital to assist the company in fulfilling its current commitments and
expanding operations related to Lateral Drilling operations and Satellite Data
Services.

In November 2003, the Company signed an option to purchase a large natural gas
field with significant current gas production for a specified time period. The
option required the Company to pay a non-refundable deposit of $500,000 and has
incurred fees to date of $120,000 associated with the transaction.

The company continuously explores ways to expand its operations either by adding
new lateral drilling rigs or by acquisitions that fit into the company's lateral
drilling or satellite operations. Such expansion will be funded by debt, equity,
or a combination.

<PAGE>

PART II

Item 6.  Exhibits and Reports on Form 8-K.

EXHIBITS

Verdisys, Inc. includes herewith the following exhibits, all of which are filed
herewith:

3.1      Restated Articles of Incorporation of Verdisys, Inc., dated July 15,
         2003, filed July 17, 2003 with Secretary of State, State of California.

10.1     Employment Agreement, by and between Verdisys, Inc. and Daniel
         Williams, President and Chief Executive Officer, dated June 2003.

10.2     Employment Agreement, by and between Verdisys, Inc. and Andrew Wilson,
         Chief Financial Officer Officer, dated June 2003.

10.3     Employment Agreement, by and between Verdisys, Inc. and David Mauz,
         Chief Operating Officer, dated June 2003.

10.4     Advisor Agreement, by and between Verdisys, Inc. and Ron Robinson,
         Chairman of the Board of Directors, dated July 2003.

10.5     Advisor Agreement, by and between Verdisys, Inc. and Eric A. McAfee,
         Director, dated October 1, 2000.

10.6     Contract by and between Verdisys, Inc. and Natural Gas Systems, re:
         lateral drilling services, "Delhi Field", dated September 22, 2003.

10.7     Contract by and between Verdisys, Inc. and Edge Capital Group, re:
         lateral drilling services, "Franklin Field", dated September 27, 2003.

10.8     Contract by and between Verdisys, Inc. and Apache Corp, re: satellite
         services, dated September 11, 2002.

10.9     Contract by and between Verdisys, Inc. and Noble Energy, re: satellite
         services, dated September 17, 2002.

10.10    Technology Report "Landers Technology", dated October 13, 2003.

10.11    Placement Agency Agreement between the Company and Stonegate
         Securities, Inc. dated August 26, 2003.

10.12    Verdisys Inc. 2003 Stock Option Plan.

10.13    Independent Contractor Agreement between the Company and TerrOnne
         Petroleum Corporation dated August 1, 2003.

10.14    Addendum to Contract by and between Verdisys, Inc. and Edge Capital
         Group re: lateral drilling services, "Monroe Field", dated November 19,
         2003.

10.14.1  Letter acknowledging amounts owed to Verdisys, Inc. at September 30,
         2003 related to Contract by and between Verdisys, Inc. and Edge
         Capital Group re: lateral services, "Monroe Field", dated June 16,
         2003.

31.1     Certification of Principal Executive Officer pursuant to Section 302 of
         the Sarbanes-Oxley Act of 2002.

31.2     Certification of Principal Accounting Officer pursuant to Section 302
         of the Sarbanes-Oxley Act of 2002.

32.1     Certification of Principal Executive Officer pursuant to 18 U.S.C.
         Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
         Act of 2002.

32.2     Certification of Principal Accounting Officer pursuant to 18 U.S.C.
         Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
         Act of 2002.

REPORTS ON FORM 8-K

On July 18, 2003, the Company filed a Current Report on Form 8-K reporting its
Agreement and Plan of Merger with Verdisys, Inc. as an event under Item 2, which
Form 8-K was amended by Amendment No. 1 to Form 8-K filed on September 29, 2003.




<PAGE>


                                   SIGNATURES

         In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.


                                             VERDISYS, INC.
                                             -----------------------------------
                                             (Registrant)

Date   November 20, 2003                     By: /s/ DAN WILLIAMS
    ----------------------                      --------------------------------
                                             Name:  Dan Williams
                                             Title: Principal Executive Officer


Date   November 20, 2003                     By: /s/ ANDREW WILSON
    ----------------------                      --------------------------------
                                             Name:  Andrew Wilson
                                             Title: Principal Accounting Officer




<PAGE>

                                 EXHIBIT INDEX

EXHIBIT
NUMBER         DESCRIPTION
- -------        -----------

3.1            Restated Articles of Incorporation of Verdisys, Inc., dated July
               15, 2003, filed July 17, 2003 with Secretary of State, State of
               California.

10.1           Employment Agreement, by and between Verdisys, Inc. and Daniel
               Williams, President and Chief Executive Officer, dated June 2003.

10.2           Employment Agreement, by and between Verdisys, Inc. and Andrew
               Wilson, Chief Financial Officer Officer, dated June 2003.

10.3           Employment Agreement, by and between Verdisys, Inc. and David
               Mauz, Chief Operating Officer, dated June 2003.

10.4           Advisor Agreement, by and between Verdisys, Inc. and Ron
               Robinson, Chairman of the Board of Directors, dated July 2003.

10.5           Advisor Agreement, by and between Verdisys, Inc. and Eric A.
               McAfee, Director, dated October 1, 2000.

10.6           Contract by and between Verdisys, Inc. and Natural Gas Systems,
               re: lateral drilling services, "Delhi Field", dated September 22,
               2003.

10.7           Contract by and between Verdisys, Inc. and Edge Capital Group,
               re: lateral drilling services, "Franklin Field", dated September
               27, 2003.

10.8           Contract by and between Verdisys, Inc. and Apache Corp, re:
               satellite services, dated September 11, 2002.

10.9           Contract by and between Verdisys, Inc. and Noble Energy, re:
               satellite services, dated September 17, 2002.

10.10          Technology Report "Landers Technology", dated October 13, 2003.

10.11          Placement Agency Agreement between the Company and Stonegate
               Securities, Inc. dated August 26, 2003.

10.12          Verdisys Inc. 2003 Stock Option Plan.

10.13          Independent Contractor Agreement between the Company and TerrOnne
               Petroleum Corporation dated August 1, 2003.

10.14          Addendum to Contract by and between Verdisys, Inc. and Edge
               Capital Group re: lateral drilling services, "Monroe Field",
               dated November 19, 2003.

10.14.1        Letter acknowledging amounts owed to Verdisys, Inc. at September
               30, 2003 related to Contract by and between Verdisys, Inc. and
               Edge Capital Group re: lateral services, "Monroe Field", dated
               June 16, 2003.

31.1           Certification of Principal Executive Officer pursuant to Section
               302 of the Sarbanes-Oxley Act of 2002.

31.2           Certification of Principal Accounting Officer pursuant to Section
               302 of the Sarbanes-Oxley Act of 2002.

32.1           Certification of Principal Executive Officer pursuant to 18
               U.S.C. Section 1350, as adopted pursuant to Section 906 of the
               Sarbanes-Oxley Act of 2002.

32.2           Certification of Principal Accounting Officer pursuant to 18
               U.S.C. Section 1350, as adopted pursuant to Section 906 of the
               Sarbanes-Oxley Act of 2002.





</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.1
<SEQUENCE>3
<FILENAME>h10836aexv3w1.txt
<DESCRIPTION>RESTATED ARTICLES OF INCORPORATION
<TEXT>
<PAGE>

                                                                     EXHIBIT 3.1

                                    A0599122

                                                    ENDORSED - FILED
                                         in the office of the Secretary of State
                                                of the State of California
                                                       JUL 17 2003
                                                      KEVIN SHELLEY
                                                    Secretary of State

                       RESTATED ARTICLES OF INCORPORATION

The undersigned certify that:

1.   They are the president and secretary, respectively of Reconstruction Data
     Group, Inc. a California corporation.

2.   The Articles of Incorporation of this corporation are amended and restated
     to read as follows:

                                    ARTICLE I

     The name of this corporation is VERDISYS, INC.

                                   ARTICLE II

     The purpose of this corporation is to engage in any lawful act of activity
for which corporation may be organized under the General Corporation Law of
California other than the banking business, the trust company business or the
practices of a profession to be incorporated by the California Corporation Code.

                                   ARTICLE III

     This corporation is authorized to issue only one class of shares of stock;
and the total number of shares which the corporation is authorized to issue is
50,000,000.

                                   ARTICLE IV

     The liability of the directors of this corporation for monetary damages
shall be eliminated to the fullest extent permissible under California law. This
corporation is authorized to provide indemnification of agents (as defined in
Section 317 of the California Corporations Code) for breach of duty to this
corporation and its shareholders through bylaw provisions or through agreements
with agents, or both, in excess of the indemnification otherwise permitted by
Section 317 of the California Corporations Code, subject to limits on such
excess indemnification set forth in Section 204 of the California Corporations
Code.

3.   The foregoing amendment and restatement of Articles of Incorporation has
     been duly approved by the board of directors.

4.   The foregoing amendment and restatement of Articles of Incorporation has
     been duly approved by the required vote of shareholders in accordance with
     Section 902, California Corporations Code. The total number of outstanding
     shares of the corporation is 3,651,500. The number of shares voting in
     favor of the amendment equaled or exceeded the vote required. The
     percentage vote required was more than 50%.

We further declare under penalty of perjury the laws of the state of California
that the matters set forth in this certificate are true and correct of our own
knowledge.

DATE: July 15,2003

                                           /s/ Scott Baker
                                           ---------------------------------
                                           Scott Baker
                                           President, Secretary and Director

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>4
<FILENAME>h10836aexv10w1.txt
<DESCRIPTION>EMPLOYMENT AGREEMENT - DANIEL WILLIAMS
<TEXT>
<PAGE>

                                                                    EXHIBIT 10.1

                                 VERDISYS, INC.
                              EMPLOYMENT AGREEMENT

                                 DANIEL WILLIAMS
                       PRESIDENT & CHIEF EXECUTIVE OFFICER

This Employment Agreement ("Agreement") is made and effective as of June ___,
2003 by and between Verdisys, Inc. ("Verdisys" or the "Company"), and Mr. Daniel
Williams ("Williams") to serve as President and Chief Executive Officer of the
Company.

NOW, THEREFORE, the parties hereto agree as follows:

1. EMPLOYMENT.

Verdisys hereby agrees to employ Dan Williams as its President and Chief
Executive Officer. Williams hereby accepts such employment in accordance with
the terms of this Agreement and the terms of employment applicable to regular
employees of Verdisys. In the event of any conflict or ambiguity between the
terms of this Agreement and terms of employment applicable to regular employees,
the terms of this Agreement shall control. Election or appointment of Williams
to another office or position, regardless of whether such office or position is
inferior to Williams' initial office or position, shall not be a breach of this
Agreement.

2. DUTIES.

The duties of Williams shall include the performance of all of the duties
typical of the office held by President & CEO as described in the bylaws of the
Verdisys and such other duties and projects as may be assigned by a superior
officer of Verdisys, if any, or the board of directors of the Company. Williams
shall devote his entire productive time, ability and attention to the business
of the Verdisys and shall perform all duties in a professional, ethical and
businesslike manner. Williams will not, during the term of this Agreement,
directly or indirectly engage in any other business, either as an employee,
employer, consultant, principal, officer, director, advisor, or in any other
capacity, either with or without compensation, without the prior written consent
of a duly authorized officer of Verdisys.

3. COMPENSATION.

Williams will be paid compensation during this Agreement as follows:

A. A base salary of $170,000 per year during the first twelve months; $190,000
per year during the second twelve months; and $210,000 per year during the third
twelve months after the date of this agreement; payable in installments on the
15th and last day of each month according to Verdisys' regular payroll schedule.

B. A Management By Objectives (MBO) plan will be established by the Company,
with a bonus of up to $100,000 per year based upon meeting or exceeding
objectives.

C. Williams has received stock options under the Company's stock option plan, as
approved by the board of directors of the Company. A listing of vested and
unvested options, including date of issuance, vesting, term for exercise, and
exercise price shall be attached hereto as Exhibit A

<PAGE>

and initialed by both parties. Exhibit A shall be updated upon any additional
issuance of options to Williams by the Company.

4. BENEFITS.

A. Holidays. Williams will be entitled to 10 paid holidays each calendar year
and 5 personal days. Verdisys will notify Williams on or about the beginning of
each calendar year with respect to the holiday schedule for the coming year.
Personal holidays, if any, will be scheduled in advance subject to requirements
of Verdisys. Such holidays must be taken during the calendar year and cannot be
carried forward into the next year. Williams is not entitled to any personal
holidays during the first six months of employment.

B. Vacation. Williams shall be entitled to 21 days paid vacation each year,
accruing if not used to a maximum of 30 days over the period of this contract.

C. Sick Leave. Williams shall be entitled to sick leave and emergency leave
according to the regular policies and procedures of Verdisys. Additional sick
leave or emergency leave over and above paid leave provided by the Verdisys, if
any, shall be unpaid and shall be granted at the discretion of the board of
directors.

D. Medical and Group Life Insurance. Verdisys agrees to include Williams in the
group medical and hospital plan of Verdisys and to provide term life insurance
for Williams at no charge to Williams in the amount of $1,000,000 during this
Agreement. Williams shall be responsible for payment of any federal or state
income tax imposed upon these benefits.

E. Pension and Profit Sharing Plans. Williams shall be entitled to participate
in any pension or profit sharing plan or other type of plan adopted by Verdisys
for the benefit of its officers and/or regular employees.

F. Expense Reimbursement. Williams shall be entitled to reimbursement for all
reasonable expenses, including travel and entertainment, incurred by Williams in
the performance of Williams' duties. Williams will maintain records and written
receipts as required by the Verdisys expense policy and reasonably requested by
the board of directors to substantiate such expenses.

5. TERM AND TERMINATION.

A. The Initial Term of this Agreement shall commence on 6/01/03 and it shall
continue in effect for a period of 36 months. Thereafter, the Agreement shall be
renewed upon the mutual agreement of Williams and Verdisys. This Agreement and
Williams' employment may be terminated at Verdisys' discretion without cause
during the Initial Term, provided that Verdisys shall pay to Williams an amount
equal to payment of Williams base salary rate for the remaining period of
Initial Term. In the event this Agreement or Williams' employment is terminated
by Verdisys at its discretion without cause at any time during the last year of
the Initial Term or after the completion of the Initial Term, Williams shall
continue to receive bi-monthly payments equal to the then-annual base salary for
a period of twelve months after termination.

C. This Agreement may be terminated by Williams at Williams' discretion by
providing at least thirty (30) days prior written notice to Verdisys. In the
event of termination by Williams pursuant to this subsection, Verdisys may
immediately relieve Williams of all duties and immediately terminate this
Agreement, provided that Verdisys shall pay Williams at the then applicable base
salary rate to the termination date included in original termination notice.

<PAGE>

D. In the event that Williams is in breach of any material obligation owed
Verdisys in this Agreement, habitually neglects the duties to be performed under
this Agreement, engages in any conduct which is dishonest, damages the
reputation or standing of Verdisys, or is convicted of any criminal act or
engages in any act of moral turpitude, then Verdisys may terminate this
Agreement for cause upon five (5) days notice to Williams. In event of
termination of the agreement pursuant to this subsection, Williams shall be paid
only at the then applicable base salary rate up to and including the date of
termination. Williams shall not be paid any incentive salary payments or other
compensation, prorated or otherwise.

D. In the event that Verdisys is acquired, is the non-surviving party in a
merger, or sells all or substantially all of its assets, this Agreement shall
not be terminated and Verdisys agrees to use its best efforts to ensure that the
transferee or surviving entity is bound by the provisions of this Agreement.

F. In the event that the Company is acquired, is the non-surviving party in a
merger, or sells all or substantially all of its assets and Dan Williams
employment under this agreement is terminated without cause at the date of sale
or any time thereafter, all unvested options shall be immediately vested upon
the date of such termination.

G. This Agreement and Dan Williams employment may be terminated by Verdisys at
its sole discretion, without cause, provided that in such case, Dan Williams
shall be paid 100% of Dan Williams' then applicable annual base salary. At the
election of the Company, such base salary may be paid along with payroll
disbursements for one year after the date of such discretionary termination.

6. NOTICES.

Any notice required by this Agreement or given in connection with it, shall be
in writing and shall be given to the appropriate party by personal delivery or
by certified mail, postage prepaid, or recognized overnight delivery services;

If to Verdisys:                                      If to Dan Williams:

Verdisys, Inc.                                       Dan Williams
25025 I-45 North, Suite 530                          12000 Sawmill Rd., #1108
The Woodlands, TX 77380                              The Woodlands, TX 77380

7. FINAL AGREEMENT.

This Agreement terminates and supersedes all prior understandings or agreements
on the subject matter hereof. This Agreement may be modified only by a further
writing that is duly executed by both parties.

8. GOVERNING LAW.

This Agreement shall be construed and enforced in accordance with the laws of
the State of Texas.

<PAGE>

9. HEADINGS.

Headings used in this Agreement are provided for convenience only and shall not
be used to construe meaning or intent.

10. NO ASSIGNMENT.

Neither this Agreement nor any or interest in this Agreement may be assigned by
Williams without the prior express written approval of Verdisys, which may be
withheld by Verdisys at Verdisys' absolute discretion.

11. SEVERABILITY.

If any term of this Agreement is held by a court of competent jurisdiction to be
invalid or unenforceable, then this Agreement, including all of the remaining
terms, will remain in full force and effect as if such invalid or unenforceable
term had never been included.

12. ARBITRATION.

The parties agree that they will use their best efforts to amicably resolve any
dispute arising out of or relating to this Agreement. Any controversy, claim or
dispute that cannot be so resolved shall be settled by final binding arbitration
in accordance with the rules of the American Arbitration Association and
judgment upon the award rendered by the arbitrator or arbitrators may be entered
in any court having jurisdiction thereof. Any such arbitration shall be
conducted in Texas, or such other place as may be mutually agreed upon by the
parties. Within fifteen (15) days after the commencement of the arbitration,
each party shall select one person to act arbitrator, and the two arbitrators so
selected shall select a third arbitrator within ten (10) days of their
appointment. Each party shall bear its own costs and expenses and an equal share
of the arbitrator's expenses and administrative fees of arbitration.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.

VERDISYS, INC.                           WILLIAMS

___________________________              _____________________________
By:  Ron Robinson, Chairman              Daniel Williams

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>5
<FILENAME>h10836aexv10w2.txt
<DESCRIPTION>EMPLOYMENT AGREEMENT - ANDREW WILSON
<TEXT>
<PAGE>

                                                                    EXHIBIT 10.2

                                  ANDREW WILSON
                            (CHIEF FINANCIAL OFFICER)
                              EMPLOYMENT AGREEMENT

This Andrew Wilson Employment Agreement ("Agreement") is made and effective this
6/01/03, by and between Verdisys, Inc. ("Verdisys") and Andrew Wilson, Chief
Financial Officer ("CFO").

NOW, THEREFORE, the parties hereto agree as follows:

1. EMPLOYMENT.

Verdisys hereby agrees to employ Andrew Wilson as its (CFO) and Andrew Wilson
hereby accepts such employment in accordance with the terms of this Agreement
and the terms of employment applicable to regular employees of Verdisys. In the
event of any conflict or ambiguity between the terms of this Agreement and terms
of employment applicable to regular employees, the terms of this Agreement shall
control. Election or appointment of Andrew Wilson to another office or position,
regardless of whether such office or position is inferior to Andrew Wilson'
initial office or position, shall not be a breach of this Agreement.

2. DUTIES OF ANDREW WILSON.

The duties of Andrew Wilson shall include the performance of all of the duties
typical of the office held by CFO as described in the bylaws of the Verdisys and
such other duties and projects as may be assigned by a superior officer of the
Verdisys, if any, or the board of directors of the Verdisys. Andrew Wilson shall
devote his entire productive time, ability and attention to the business of the
Verdisys and shall perform all duties in a professional, ethical and
businesslike manner. Andrew Wilson will not, during the term of this Agreement,
directly or indirectly engage in any other business, either as an employee,
employer, consultant, principal, officer, director, advisor, or in any other
capacity, either with or without compensation, without the prior written consent
of Verdisys.

3. COMPENSATION.

Andrew Wilson will be paid compensation during this Agreement as follows:

A. A base salary of $150,000.00 year one, $180,000.00 year two and $210,000.00
year three payable in installments according to the Verdisys' regular payroll
schedule. The anniversary for these salary schedule increases will be fiscal
year end of each year.

B. A Management By Objectives (MBO) plan will be made available as additional
incentive salary in a separate agreement.

C. Stock Options. Options for 500,000 shares of common stock with a $0.10 per
share strike price to transfer over the term of this agreement (these options
will be in addition to option agreements already previously in force). All stock
options will have an exercise period of 60 months from origination of documents.
In the event Verdisys is acquired, or

<PAGE>

is the non-surviving party in a merger, or sells all or substantially all of its
assets, said options will be immediately accelerated to full vesting
availability.

4. BENEFITS.

A. Holidays. Andrew Wilson will be entitled to at least 14 paid holidays each
calendar year and 10 personal days. Verdisys will notify Andrew Wilson on or
about the beginning of each calendar year with respect to the holiday schedule
for the coming year. Personal holidays, if any, will be scheduled in advance
subject to requirements of Verdisys. Such holidays must be taken during the
calendar year and cannot be carried forward into the next year. Andrew Wilson is
not entitled to any personal holidays during the first six months of employment.

B. Vacation. Andrew Wilson shall be entitled to 20 days paid vacation each year.
Accruing annually if not used to a maximum of 60 days over the period of this
contract.

C. Sick Leave. Andrew Wilson shall be entitled to sick leave and emergency leave
according to the regular policies and procedures of Verdisys. Additional sick
leave or emergency leave over and above paid leave provided by the Verdisys, if
any, shall be unpaid and shall be granted at the discretion of the board of
directors.

D. Medical and Group Life Insurance. Verdisys agrees to include Andrew Wilson in
the group medical and hospital plan of Verdisys and provide group life insurance
for Andrew Wilson at no charge to Andrew Wilson in the amount of $1,000,000.00
during this Agreement. Andrew Wilson shall be responsible for payment of any
federal or state income tax imposed upon these benefits.

E. Automobile. Verdisys will provide to Andrew Wilson the use of an automobile
of Andrew Wilson's choice at a gross purchase price not to exceed $45,000.00.
Verdisys agrees to replace the automobile with a new one at Andrew Wilson's
request no more often than once every two years. Verdisys will pay all
automobile operating expenses incurred by Andrew Wilson in the performance of
Verdisys duties. Verdisys will procure and maintain in force an automobile
liability policy for the automobile with coverage, including Andrew Wilson, in
the minimum amount of $1,000,000 combined single limit on bodily injury and
property damage.

F. Pension and Profit Sharing Plans. Andrew Wilson shall be entitled to
participate in any pension or profit sharing plan or other type of plan adopted
by Verdisys for the benefit of its officers and/or regular employees.

G. Expense Reimbursement. Andrew Wilson shall be entitled to reimbursement for
all reasonable expenses, including travel and entertainment, incurred by Andrew
Wilson in the performance of Andrew Wilson' duties. Andrew Wilson will maintain
records and written receipt as required by the Verdisys policy and reasonably
requested by the board of directors to substantiate such expenses.

<PAGE>

5. TERM AND TERMINATION.

A. The Initial Term of this Agreement shall commence on 6/01/03 and it shall
continue in effect for a period of 36 months. Thereafter, the Agreement shall be
renewed upon the mutual agreement of Andrew Wilson and Verdisys. This Agreement
and Andrew Wilson' employment may be terminated at Verdisys' discretion during
the Initial Term, provided that Verdisys shall pay to Andrew Wilson an amount
equal to payment of Andrew Wilson base salary rate for the remaining period of
Initial Term, plus an amount equal to 150% of Andrew Wilson annual base salary.
In the event of such termination, Andrew Wilson shall not be entitled to any
incentive salary payment or any other compensation then in effect, prorated or
otherwise.

B. This Agreement and Andrew Wilson's employment may be terminated by Verdisys
at its discretion at any time after the Initial Term, provided that in such
case, Andrew Wilson shall be paid 150% of Andrew Wilson's then applicable annual
base salary.

C. This Agreement may be terminated by Andrew Wilson at Andrew Wilson'
discretion by providing at least thirty (30) days prior written notice to
Verdisys. In the event of termination by Andrew Wilson pursuant to this
subsection, Verdisys may immediately relieve Andrew Wilson of all duties and
immediately terminate this Agreement, provided that Verdisys shall pay Andrew
Wilson at the then applicable base salary rate to the termination date included
in original termination notice.

D. In the event that Andrew Wilson is in breach of any material obligation owed
Verdisys in this Agreement, habitually neglects the duties to be performed under
this Agreement, engages in any conduct which is dishonest, damages the
reputation or standing of Verdisys, or is convicted of any criminal act or
engages in any act of moral turpitude, then Verdisys may terminate this
Agreement upon five (5) days notice to Andrew Wilson. In event of termination of
the agreement pursuant to this subsection, Andrew Wilson shall be paid only at
the then applicable base salary rate up to and including the date of
termination. Andrew Wilson shall not be paid any incentive salary payments or
other compensation, prorated or otherwise.

E. In the event Verdisys is acquired, or is the non-surviving party in a merger,
or sells all or substantially all of its assets, this Agreement shall not be
terminated and Verdisys agrees to use its best efforts to ensure that the
transferee or surviving entity is bound by the provisions of this Agreement.

6. NOTICES.

Any notice required by this Agreement or given in connection with it, shall be
in writing and shall be given to the appropriate party by personal delivery or
by certified mail, postage prepaid, or recognized overnight delivery services;

         If to Verdisys:                                  If to Andrew Wilson:
         25025 I-45 North., Suite 525                     201 Tipperary Lane
         The Woodlands, TX 77380                          Alameda, Ca. 94502

<PAGE>

7. FINAL AGREEMENT.

This Agreement terminates and supersedes all prior understandings or agreements
on the subject matter hereof. This Agreement may be modified only be a further
writing that is duly executed by both parties.

8. GOVERNING LAW.

This Agreement shall be construed and enforced in accordance with the laws of
the state of California.

9. HEADINGS.

Headings used in this Agreement are provided for convenience only and shall not
be used to construe meaning or intent.

10. NO ASSIGNMENT.

Neither this Agreement nor any or interest in this Agreement may be assigned by
Andrew Wilson without the prior express written approval of Verdisys, which may
be withheld by Verdisys at Verdisys' absolute discretion.

11. SEVERABILITY.

If any term of this Agreement is held by a court of competent jurisdiction to be
invalid or unenforceable, then this Agreement, including all of the remaining
terms, will remain in full force and effect as if such invalid or unenforceable
term had never been included.

12. ARBITRATION.

The parties agree that they will use their best efforts to amicably resolve any
dispute arising out of or relating to this Agreement. Any controversy, claim or
dispute that cannot be so resolved shall be settled by final binding arbitration
in accordance with the rules of the American Arbitration Association and
judgment upon the award rendered by the arbitrator or arbitrators may be entered
in any court having jurisdiction thereof. Any such arbitration shall be
conducted in California, or such other place as may be mutually agreed upon by
the parties. Within fifteen (15) days after the commencement of the arbitration,
each party shall select one person to act arbitrator, and the two arbitrators so
selected shall select a third arbitrator within ten (10) days of their
appointment. Each party shall bear its own costs and expenses and an equal share
of the arbitrator's expenses and administrative fees of arbitration.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.

VERDISYS, INC.                 ANDREW WILSON

_______________________        _____________________________

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>6
<FILENAME>h10836aexv10w3.txt
<DESCRIPTION>EMPLOYMENT AGREEMENT - DAVID MAUZ
<TEXT>
<PAGE>

                                                                    EXHIBIT 10.3

                         EXECUTIVE EMPLOYMENT AGREEMENT

This Executive Employment Agreement ("Agreement") is made and effective this 1st
day of June, 2003 by and between VERDISYS, INC. ("COMPANY") and DAVID MAUZ
("EXECUTIVE").

NOW, THEREFORE, the parties hereto agree as follows:

1.   EMPLOYMENT

     Company hereby agrees to initially employ Executive as its Chief Operations
     Officer and Executive hereby accepts such employment in accordance with the
     terms of this Agreement and the terms of employment applicable to regular
     employees of Company. In the event of any conflict or ambiguity between the
     terms of this Agreement and terms of employment applicable to regular
     employees, the terms of this Agreement shall control. Election or
     appointment of Executive to another office or position, regardless of
     whether such office or position is inferior to Executive's initial office
     or position, shall not be a breach of this Agreement.

2.   DUTIES OF EXECUTIVE

     The duties of Executive shall include the performance of all of the duties
     typical of the office held by Executive as described in the bylaws of the
     Company and such other duties and projects as may be assigned by a superior
     officer of the Company, if any, or the board of directors of the Company.
     Executive shall devote his entire productive time, ability and attention to
     the business of the Company and shall perform all duties in a professional,
     ethical and businesslike manner. Executive will not, during the term of
     this Agreement, directly or indirectly engage in any other business, either
     as an employee, employer, consultant, principal, officer, director,
     advisor, or in any other capacity, either with or without compensation,
     without the prior written consent of Company. In addition to the duties
     described herein, Executive is also authorized and directed to do the
     following.

3.   COMPENSATION

     Executive will be paid compensation during this Agreement as follows:

         a.    A base salary of $140,000.00 (one hundred and forty thousand
               dollars) year one, $170,000.00 year two and $200,000.00 year
               three; payable in installments according to the Company's regular
               payroll schedule. Scheduled increases will happen at the fiscal
               year end of each year.

         b.    A Management By Objectives (MBO) plan will be made available as
               additional incentive salary in a separate agreement.

         c.    Stock Options. Options for 1,000,000 shares of common stock with
               a $0.10 per share strike price to transfer immediately upon the
               execution of this agreement (these options will be in addition to
               option agreements already previously in force). In addition,
               executive will receive options for 100,000 shares of common stock
               per year, transferable on the anniversary of the execution of
               this agreement every year for the term of this agreement. All
               previous Verdisys stock options from the period of 7/10/2000 -
               present, that are not already vested for purchase will become
               immediately available for vested purchase upon execution of this
               agreement in accordance with said

Confidential                                                          11/18/2003

                                     Page 1
<PAGE>

               existing stock option agreements. All stock options will have an
               exercise period of 60 months from origination of documents.

         d.    Past due Compensation. Dispensation(s) of all past due
               compensation owed to executive will be negotiated in a separate
               agreement.

4.   BENEFITS

         a.    Holidays. Executive will be entitled to at least 14 paid holidays
               each calendar year and 10 personal days. Company will notify
               Executive on or about the beginning of each calendar year with
               respect to the holiday schedule for the coming year. Personal
               holidays, if any, will be scheduled in advance subject to
               requirements of Company. Such holidays must be taken during the
               calendar year and cannot be carried forward into the next year.
               Executive is not entitled to any personal holidays during the
               first six months of employment.

         b.    Vacation. Following the first six months of employment, Executive
               shall be entitled to 30 days paid vacation each year accruing
               monthly at a rate of 2.5 days per month to a maximum of 180 days.

         c.    Sick Leave. Executive shall be entitled to sick leave and
               emergency leave according to the regular policies and procedures
               of Company. Additional sick leave or emergency leave over and
               above paid leave provided by the Company, if any, shall be unpaid
               and shall be granted at the discretion of the board of directors.

         d.    Medical and Group Life Insurance. Company agrees to include
               Executive in the group medical and hospital plan of Company and
               provide group life insurance for Executive at no charge to
               Executive in the amount of 1,000,000.00 (one million dollars)
               during this Agreement. Executive shall be responsible for payment
               of any federal or state income tax imposed upon these benefits.

         e.    Pension and Profit Sharing Plans. Executive shall be entitled to
               participate in any pension or profit sharing plan or other type
               of plan adopted by Company for the benefit of its officers and/or
               regular employees.

         f.    Automobile. Verdisys will provide to Executive the use of an
               automobile of executive's choice at a gross purchase price not to
               exceed $45,000.00. Verdisys agrees to replace the automobile with
               a new one at executive's request no more often than once every
               two years. Verdisys will pay all automobile operating expenses
               incurred by executive in the performance of Verdisys duties.
               Verdisys will procure and maintain in force an automobile
               liability policy for the automobile with coverage, including
               executive, in the minimum amount of $1,000,000 combined single
               limit on bodily injury and property damage.

         g.    Expense Reimbursement. Executive shall be entitled to
               reimbursement for all reasonable expenses, including travel and
               entertainment, incurred by Executive in the performance of
               Executive's duties. Executive will maintain records and written
               receipt as required by the Company policy and reasonably
               requested by the board of directors to substantiate such
               expenses.

5.   TERM AND TERMINATION

         a.    The Initial Term of this Agreement shall commence on April 1,
               2003 and it shall continue in effect for a period of three years.
               Thereafter, the Agreement

Confidential                                                          11/18/2003

                                     Page 2
<PAGE>

               shall be renewed upon the mutual agreement of Executive and
               Company. This Agreement and Executive's employment may be
               terminated at Company's discretion during the Initial Term,
               provided that Company shall pay to Executive an amount equal to
               payment at Executive's base salary rate for the remaining period
               of Initial Term, plus an amount equal to 150% of Executive's base
               salary. In the event of such termination, Executive shall not be
               entitled to any incentive salary payment or any other
               compensation then in effect, prorated or otherwise.

         b.    This Agreement and Executive's employment may be terminated by
               Company at its discretion at any time after the Initial Term,
               provided that in such case, Executive shall be paid 150% of
               Executive's then applicable base salary.

         c.    This Agreement may be terminated by Executive at Executive's
               discretion by providing at least thirty (30) days prior written
               notice to Company. In the event of termination by Executive
               pursuant to this subsection, Company may immediately relieve
               Executive of all duties and immediately terminate this Agreement,
               provided that Company shall pay Executive at the then applicable
               base salary rate to the termination date included in Executive's
               original termination notice.

         d.    In the event that Executive is in breach of any material
               obligation owed Company in this Agreement, habitually neglects
               the duties to be performed under this Agreement, engages in any
               conduct which is dishonest, damages the reputation or standing of
               the Company, or is convicted of any criminal act or engages in
               any act of moral turpitude, then Company may terminate this
               Agreement upon five (5) days notice to Executive. In event of
               termination of the agreement pursuant to this subsection,
               Executive shall be paid only at the then applicable base salary
               rate up to and including the date of termination. Executive shall
               not be paid any incentive salary payments or other compensation,
               prorated or otherwise.

         e.    In the event Company is acquired, or is the non-surviving party
               in a merger, or sells all or substantially all of its assets,
               this Agreement shall not be terminated and Company agrees to use
               its best efforts to ensure that the transferee or surviving
               company is bound by the provisions of this Agreement.

6.   NOTICES

     Any notice required by this Agreement or given in connection with it, shall
     be in writing and shall be given to the appropriate party by personal
     delivery or by certified mail, postage prepaid, or recognized overnight
     delivery services;

         If to Company:
         Verdisys, Inc.
         25025 I-45 North
         Suite 525
         The Woodlands, TX  77380

         If to Executive:
         David C. Mauz
         87 Blue Creek Place

Confidential                                                          11/18/2003

                                     Page 3
<PAGE>

         The Woodlands, TX 77382

7.   FINAL AGREEMENT

     This Agreement terminates and supersedes all prior understandings or
     agreements on the subject matter hereof. This Agreement may be modified
     only be a further writing that is duly executed by both parties.

8.   GOVERNING LAW

     This Agreement shall be construed and enforced in accordance with the laws
     of the state of Texas.

9.   HEADINGS

     Headings used in this Agreement are provided for convenience only and shall
     not be used to construe meaning or intent.

10.  NO ASSIGNMENT

     Neither this Agreement nor any or interest in this Agreement may be
     assigned by Executive without the prior express written approval of
     Company, which may be withheld by Company at Company's absolute discretion.

11.  SEVERABILITY

     If any term of this Agreement is held by a court of competent jurisdiction
     to be invalid or unenforceable, then this Agreement, including all of the
     remaining terms, will remain in full force and effect as if such invalid or
     unenforceable term had never been included.

12.  ARBITRATION

     The parties agree that they will use their best efforts to amicably resolve
     any dispute arising out of or relating to this Agreement. Any controversy,
     claim or dispute that cannot be so resolved shall be settled by final
     binding arbitration in accordance with the rules of the American
     Arbitration Association and judgment upon the award rendered by the
     arbitrator or arbitrators may be entered in any court having jurisdiction
     thereof. Any such arbitration shall be conducted in Texas, or such other
     place as may be mutually agreed upon by the parties. Within fifteen (15)
     days after the commencement of the arbitration, each party shall select one
     person to act arbitrator, and the two arbitrators so selected shall select
     a third arbitrator within ten (10) days of their appointment. Each party
     shall bear its own costs and expenses and an equal share of the
     arbitrator's expenses and administrative fees of arbitration.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.

_________________________           ___________________________

By:______________________           By: David C. Mauz

Title: __________________           Chief Operations Officer

Verdisys, Inc.                      Verdisys, Inc.

Confidential                                                          11/18/2003

                                     Page 4

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.4
<SEQUENCE>7
<FILENAME>h10836aexv10w4.txt
<DESCRIPTION>ADVISOR AGREEMENT - RON ROBINSON
<TEXT>
<PAGE>

                                                                    EXHIBIT 10.4

                               ADVISORY AGREEMENT

         THIS ADVISORY AGREEMENT is made this 1st day of July 2003 by and
between Verdisys, Inc. (hereinafter referred to as "Company") and Dr. Ron
Robinson ("Advisor").

         WHEREAS, Company desires to retain Advisor to render consulting and
advisory services to Company upon the terms and conditions hereinafter set
forth; and

         WHEREAS, Advisor desires to accept such engagement, upon the terms and
conditions hereinafter set forth.

         NOW THEREFORE, in consideration of the promises and mutual agreements
hereinafter set forth, the parties agree as follows:

         1.    ADVISORY SERVICES

         Company hereby engages Advisor, and Advisor hereby accepts such
engagement from Company, to serve as the Chairman of the Board of Directors of
the company and as a general advisor to executive management, and to render such
additional services as are pertinent thereto within the scope set forth below.
Said time commitment of the advisory services to this agreement is eighty (80)
hours per month.

         The parties agree that Advisor will render the following services:

         A.    Serve as the Chairman of Board of the Company;

         B.    Assist the Company and its executive management in general
               corporate development and planning;

         C.    Assist in the procurement of additional customers for the
               Company;

         D.    Assist and advise in the acquisition of oil and gas producing
               properties, and the negotiation of the joint ventures and
               partnerships for the acquisition of oil and gas properties.

         E.    Assist in the placement and raising of capital as the Company
               sees fit.

         2.    TERM - The term of this engagement shall be for twelve months
from the date first set forth above and shall continue month to month thereafter
until terminated by either party.

         3.    COMPENSATION

                  A. Advisory Fee

                  The Company shall pay to Advisor the amount of $10,000 per
month as an advisory fee for Advisor's services (the "Monthly Retainer"). The
Monthly Retainer is due and payable at the rate of one-half on the 15th and
one-half on the last day of each month for the duration of this agreement.

         4.    EXPENSES

         Company will reimburse Advisor for pre-approved expenses incurred on
the Company's behalf, including but not limited to travel, hotels and other
direct costs.

         5.    TERMINATION

         Either party may terminate this agreement by notifying the other party
in writing at the address set forth below on ten days notice. However, the
Monthly Advisory fee shall continue to be paid for the initial

<PAGE>

twelve month period in the event of termination by the Company for any reason
other than fraud against the company or voluntary resignation from the board of
directors by the Advisor.

         Advisor's right to, and Company's obligation of, payment under this
paragraph shall survive the termination of this Agreement.

         6.    NOTICES

         All notices hereunder shall be in writing and shall be deemed to have
been given at the time when mailed in any general or branch of the United States
Post Office enclosed in a registered or certified postage pre-paid envelope,
return receipt requested, addressed to the address of the respective parties as
stated below, or to such address as such party may have fixed by notice as
aforesaid:

                  If to Company:

                  Verdisys, Inc.

                  If to Advisor:

                  Dr. Ron Robinson
                  5010 Augusta Circle
                  College Station, TX 77845

         7.    WAIVER

         Failure to insist upon strict compliance with any of the terms,
covenants, or conditions hereof shall not be deemed a waiver of such term,
covenant, or condition, nor shall any waiver or relinquishment of any right of
power hereunder at any one time or more times be deemed a waiver or
relinquishment of such right or power at any other time or times.

         8.    SEVERABILITY

         The invalidity of unenforceability of any term or provision, or any
clause or portion thereof, of this Agreement, shall in no way impair or affect
the validity or enforceability of any other provision of this Agreement, all of
the same which shall remain in full force and effect in accordance with the
terms hereof.

         9.    ENTIRE AGREEMENT

         This Agreement embodies the entire understanding between the parties on
the matters of Consultation and remuneration for same, any and all prior
correspondence, conversations, or memoranda being merged herein and replaced
hereby and being without effect herein, and no change, alteration, or
modification hereof may be made except in writing signed by both parties hereto.

         10.   GOVERNING LAW

         This Agreement is entered into and intended to be performed in the
State of Texas and shall be governed by the laws of the State of Texas.

         11.   ATTORNEY'S FEES

         In the event of litigation arising out of this Agreement, the
prevailing party shall be entitled to an award of its reasonable attorney's fees
and costs, including any fees incurred on appeal.

         12.   NO WARRANTIES OR REPRESENTATIONS

                                       2
<PAGE>

         All services performed by Advisor pursuant to this Agreement are on a
"best efforts" basis. Advisor makes no warranties or representations, express or
implied, as to the success of its efforts on Company's behalf.

         IN WITNESS WHEREOF, the parties have signed this agreement as of the
date first set forth above.

ADVISOR:                                    COMPANY:

Dr. Ron Robinson                            Verdisys, Inc.

______________________________              By__________________________________
Ron Robinson                                    Dan Williams, CEO

                                        3

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.5
<SEQUENCE>8
<FILENAME>h10836aexv10w5.txt
<DESCRIPTION>ADVISOR AGREEMENT - ERIC A. MCAFEE
<TEXT>
<PAGE>

                                                                    EXHIBIT 10.5

ADVISORY AGREEMENT

     THIS ADVISORY AGREEMENT ("Agreement"), made as of October 1, 2000 is by and
between THEAGZONE, INC., a Delaware corporation (the "Company") and ERIC A.
MCAFEE (the "Advisor").

     In consideration of the mutual covenants contained in this Agreement, the
Company and Advisor agree as follows:

     1. CONSULTING PERIOD. The Company will engage Advisor for an initial period
commencing October 1, 2000 and ending December 31, 2001 (the "Initial Consulting
Period"), and thereafter, the Agreement shall automatically renew for additional
periods of six months each (the "Renewal Consulting Periods" (collectively, the
"Consulting Period"), unless either party provides written notice of termination
to the other at least ten (10) days prior to the expiration of the Initial
Consulting Period, or any Renewal Consulting Period.

     2. CONSULTING SERVICES. During the Consulting Period, Advisor shall report
to the Company's Board of Directors ("Board") and will provide consulting
services to the Company as necessary to accomplish the objectives set forth.
Specifically, Advisor shall provide the Company with the following (the
"Consulting Services"):

     (a) Advisory services related to the structure of and referrals to
         potential investors in financings by the Company;

     (b) Sourcing and facilitating the Company's engagement of accounting and
         law firms as the Board shall direct from time to time;

     (c) Advising in the preparation of an S-1 and preparation for an IPO and/or
         sale of the Company; and

     (d) Such other matters as may be determined from time-to-time by the Board
         with the consent of the Advisor.

     Advisor agrees to exercise the highest degree of professionalism and to
utilize his expertise and creative talents in performing the Consulting
Services.

     3. NON-EXCLUSIVE RELATIONSHIP. Company specifically acknowledges that its
relationship with Advisor is not exclusive, and that during the Consulting
Period Advisor may engage in other work and/or projects on behalf of himself or
other persons or entities that are not directly related to the Company, at
Advisor's sole discretion.

     4.  CONSULTING FEES AND ADMINISTRATIVE COSTS. As compensation for
consulting services rendered pursuant to this Agreement, Company shall:

     (a) Pay Advisor a consulting fee at the monthly rate of $8,500, paid twice
         each month along with payroll disbursements, without deduction of taxes
         (the "Consulting Fees").

     (b) Reimburse Advisor $1,500 per month for administrative costs and
         expenses (the "Administrative Costs"), paid along with the Consulting
         Fees set forth herein.

     (c) Reimburse Advisor for legal, accounting, professional and due diligence
         in an amount equal to three percent of all amounts received in the
         current bridge financing and the Series B financing by the Company.
         This amount shall be paid to Advisor at the time of any disbursement
         from escrow account for each respective offering, and shall be included
         in any escrow instruction for each financing.

                                       1
<PAGE>

     5. BUSINESS EXPENSES. The Company shall reimburse Advisor for the
reasonable cost of all corporate travel, hotels, meals and other business
expenses Advisor incurs on behalf of the Company pursuant to this Agreement and
pursuant to standard company policies. The Company shall have the right to make
flight, auto and hotel reservations and pay for such reservations in advance or
make arrangements for payment to the travel vendor at time of expense
incurrence. No expense in excess of $500 shall be undertaken without express
approval by the Company. Advisor shall submit to the Company receipts or other
documentation sufficient to reflect any such claimed expenses.

     6. INDEPENDENT CONTRACTOR RELATIONSHIP. Advisor's relationship with the
Company is that of an independent contractor, and nothing in this Agreement is
intended to, or should be construed to, create a partnership, agency, joint
venture or employment relationship. Advisor will not be entitled to any of the
benefits that the Company may make available to its employees, including, but
not limited to, group health or life insurance, profit sharing or retirement
benefits. Advisor is solely responsible for, and will file, on a timely basis,
all tax returns and payments required to be filed with, or made to, any federal,
state or local tax authority with respect to the performance of services and
receipt of fees under this Agreement. No part of Advisor's compensation shall be
subject to withholding by the Company for the payment of any social security,
federal, state or any other employee payroll taxes. The Company will regularly
report amounts paid to Advisor by filing Form(s) 1099-MISC with the Internal
Revenue Service as required by law.

     7. TERMINATION. The Company may terminate that Agreement at any time,
without Cause, and Advisor may terminate this Agreement at any time without Good
Reason upon giving thirty (20) days written notice to the other party
("Effective Termination Date"). The Company may terminate this Agreement for
Cause, and Advisor may terminate this Agreement for Good Reason, upon giving
notice to the other party, which shall be the Effective Termination Date in such
event.

     In the event the Company terminates this Agreement without Cause, or
Advisor terminates this Agreement for Good Reason, (a) the Company shall pay
Advisor a termination fee equal to the amount of Consulting Fees Advisor would
have been entitled to receive had the Advisor continued to perform services
hereunder through the end of the Initial Consulting Period or the Renewal
Consulting Period in which the Effective Termination Date falls ("Termination
Consulting Period").

     As used herein, "Cause" shall mean: (a) Advisor's indictment or conviction
(including a no contest or guilty plea) of any felony or of any crime involving
dishonesty or moral turpitude; or (b) Advisor's participation in a fraud that
materially and irreparably damages the Company, with such fraud to be confirmed
by the final judgement of a court of competent jurisdiction.

     As used herein, "Good Reason" shall mean: (a) the Company makes a general
assignment for the benefit of creditors, files a voluntary bankruptcy petition,
files a petition or answer seeking a reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any law, there
shall have been filed any petition or application for the involuntary bankruptcy
of Company, or other similar proceeding, in which an order for relief is entered
or which remains undismissed for a period of 30 days or more, or the Company
seeks, consents to, or acquiesces in the appointment of a trustee, receiver, or
liquidator of the Company or any material party of its assets; (b) the Company
makes material changes to the nature or extent of the Consulting Services
without Advisor's express written consent; or (c) the Company fails to pay the
compensation and benefits required under this agreement.

                                        2
<PAGE>

     8. INDEMNIFICATION. To the fullest extent permitted by applicable law, the
Company agrees to indemnify, defend and hold Advisor harmless from any and all
claims, actions, costs, expenses, damages and liabilities including, without
limitation, reasonable attorneys' fees, hereafter or heretofore arising out of
or in connection with his performance of the Consulting Services or other
activities on behalf of the Company, or by reason of the fact that he is or was
a director or officer of the Company or any affiliate of the Company. Th the
fullest extent permitted by applicable law, the Company shall advance to Advisor
the anticipated and actual expenses necessary to defending any such action,
claim or proceeding. The Company shall not be obligated to indemnify Advisor or
defend Advisor against, or hold him harmless from, any claims, damages, expenses
or liabilities, including attorneys' fees, resulting from the gros negligence or
willful misconduct of the Advisor. For purpose of this paragraph, no act, or
failure to act, on the part of the Advisor shall be considered "willful" unless
done, or omitted to be done, not in good faith and without reasonable belief by
him that his action or omission was in the best interests of the Company, as
determined by the final judgement of a court of competent jurisdiction. The duty
to indemnify shall survive the expiration or early termination of this Agreement
as to any such claims based on facts or conditions that occurred or are alleged
to have occurred prior to such expiration or termination.

     9. SUCCESSORS AND ASSIGNS. Advisor may not subcontract or otherwise
delegate his obligations under this Agreement without the Company's prior
written consent. Subject to the foregoing, this Agreement will be for the
benefit of the Company's successors and assigns, and will be binding on
Advisor's assignees.

     10. NOTICE. Any notice required or permitted by this Agreement shall be in
writing and shall be delivered as follows with notice deemed given as indicated:
(i) by personal delivery when delivered personally; (ii) by overnight courier
upon written verification of receipt; (iii) by telecopy or facsimile
transmission upon acknowledgement of receipt of electronic transmission; or (iv)
by certified or registered mail, return receipt requested, upon verification of
receipt. Notices shall be sent to the following addresses:

       If to Advisor:                            If to Company:

       Eric A. McAfee                            TheAgZone, Inc.
       Berg McAfee Companies                     5260 N. Palm Avenue, Suite 300
       10600 N. De Anza Blvd., Suite 250         Fresno, CA 93704
       Cupertino, CA 95014                       Attn: CEO

     11. GOVERNING LAW. This Agreement shall be governed in all respects by the
laws of the State of California, as such laws are applied to agreements entered
into and to be performed entirely within California between California
residents.

     12. SEVERABILITY. Should any provision of this Agreement be held by a court
of law to be illegal, invalid or unenforceable, the legality, validity and
enforceability of the remaining provision of this Agreement shall not be
affected or impaired thereby.

     14. BOARD APPROVAL REQUIRED. The issuance of a warrant provided hereunder
shall be effective upon approval by the Board of Directors of the Company. All
other terms and conditions set forth herein are immediately effective as to both
parties.

     15. JURISDICTION. This agreement is subject to the laws and regulations of
the State of California, County of Santa Clara.

     16. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties relating to this subject matter and supercedes all prior or
contemporaneous oral or written agreements concerning such subject matter. This
Agreement may only be changed by mutual agreement of authorized representatives
of the parties in writing.

                                       3
<PAGE>

         THEAGZONE, INC.                             ADVISOR

         /s/ Kevin Bradshaw                          /s/ Eric A. McAfee
         ---------------------------                 ---------------------------

     By: KEVIN BRADSHAW CFO                          ERIC A. McAFEE

         Dated: 11/8/00                              Dated: 11/8/00

                                       4

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.6
<SEQUENCE>9
<FILENAME>h10836aexv10w6.txt
<DESCRIPTION>CONTRACT - NATURAL GAS SYSTEMS
<TEXT>
<PAGE>

                                                                    EXHIBIT 10.6

[VERDISYS(TM) LOGO]                   VERDISYS, INC.
                                      25025 I-45 NORTH, SUITE 525
                                      THE WOODLANDS, TX  77380
                                      TOLL FREE: (281) 364-6999
                                      WEB: WWW.VERDISYS.COM  FAX: (281) 364-8007

        LATERAL DRILLING SERVICE AGREEMENT FOR DELHI AND FRANKLIN FIELDS
               NATURAL GAS SYSTEMS CORPORATION AND VERDISYS, INC.

This Lateral Drilling Services Agreement ("AGREEMENT") is dated as of September
22, 2003, by and between Verdisys, Inc., a California corporation ("VERDISYS"),
and Natural Gas Systems Corporation, a Delaware corporation ("NGS"). NGS seeks
to engage Verdisys to provide development expertise and lateral drilling
services, to NGS in the Delhi Gas Field and adjacent Franklin Properties in
Delhi, Louisiana (combined, the "DELHI FIELD").

                              1.0 LATERAL DRILLING

1.1 LOCATION OF SERVICES

Verdisys will provide lateral drilling services in wells in the Delhi Field
identified with greater specificity as to location on the attached Term and
Pricing Invoice, which may be updated by the constituent corporations from time
to time.

1.2 PARAMETERS OF DRILLING

Laterals will be drilled at a depth of no more than 5800' with a horizontal
maximum of 300'.

                          2.0 SERVICE FEES AND ROYALTY

2.1 LATERAL DRILLING SERVICE FEES

Verdisys Lateral Drilling Services ("DRILLING SERVICES") will be billed at the
time of commencement of drilling at the package rate set forth in the attached
Term and Pricing Invoice. The Drilling Services are for each individual well
site pertaining to this Contract. NGS shall be provided the Drilling Services at
the minimum number of wells and at the prices identified on the Term and Pricing
Invoice attached hereto. Verdisys will bill NGS upon completion of drilling
services at each well, including any additional laterals requested, with payment
due within thirty (30) days of completion of the well services.

2.2 INITIAL PAYMENT AND PROMISSORY NOTE TO SECURE DELHI FIELD

NGS will enter into the purchase and sale agreement for the Delhi Field and
close the purchase of the Delhi Field with an initial payment of $1,000,000.00
no later than September 25, 2003, subject to satisfactory review of the closing
documents and review of the related title opinions and environmental audits, and
shall make an additional payment of $200,000.00 for the Franklin Properties to
be paid no later than October 25, 2003. NGS, as part of the closing, will also
enter into a promissory note for $1,500,000.00 payable in twelve equal monthly
in installments beginning on January 31st, 2004 to the seller of the Delhi Field
(the "NOTE").

2.3 NET PROFITS INTEREST

In addition to the fee for Drilling Services, NGS shall assign to Verdisys a 70%
after-payout interest in the Net Profits from the NGS interests in the Delhi Gas
Properties (the "Verdisys NPI"). NET PROFITS shall be defined to be the net
revenues to the working interests of NGS from the Delhi Field less all gathering
fees, product marketing expenses, if any, lease operating

Service Contract - WEBB and Verdisys, Inc.                                     1

<PAGE>

expenses, ongoing capital expenditures in the normal course of business,
standard COPAS overhead charges, other royalties and any other related fees and
expenses. PAY-OUT will be calculated when NGS has received from 100% of the Net
Profits an amount equal to the sum of (i) the Initial Payments, (ii) all
payments to service and retire the related Note, (iii) all capital expenditures
to develop and otherwise exploit and explore the Delhi Field including all
transaction costs of closing, plus (iv) a cash-on-cash return of ten percent
(10%) on (i) through (iii). Either Verdisys or NGS may audit the Net Profits
calculation upon ten days written notice within normal business hours on an
annual basis.

Neither Verdisys nor NGS shall be directly or indirectly liable or obligated in
any way to the other party or to any third party for any financing or other
payment obligations related to the Drilling Services, including principal,
interest, fees or other costs related thereto, except NGS's obligations under
the Note. The obligations of Verdisys are specifically limited to compliance
with the terms of this agreement related to the assignment of funds by Verdisys
to the Drilling Services Financing Escrow Account for the limited time period
described herein.

2.4 OPERATIONS

NGS will take over operations of the Delhi Field, but shall give reasonable
preference to utilization of either the existing operations staff or other staff
knowledgeable of the Delhi Field. NGS shall subcontract to Verdisys the
development operations of the Delhi Field subject to a development plan and
budget approved by NGS. After Payout, NGS and Verdisys shall mutually agree to
any change in the listed operator of the Delhi Field.

                         3.0 RESPONSIBILITIES OF PARTIES

3.1 VERDISYS SERVICES

Verdisys will provide lateral drilling to a depth of 5800' in the existing well
structure with four (4) laterals to a maximum horizontal distance of 300' from
the center of the well bore.

3.2 DEVELOPMENT BUDGET

NGS and Verdisys shall mutually agree to an annual development budget with
quarterly reviews and adjustments. In the event that a capital expenditure
incremental to the development budget is required, then NGS shall provide an
officer contact that will review for approval such expenditure within 48 hours
of notice with all relevant information. The development budget shall further
specify an amount of nonbudget expenditure within certain types of expenditures
that shall be within the approval authority of Verdisys for the purpose of
timely and reasonable operations.

The determination as to the appropriate number of laterals to be drilled to
obtain maximum return from the well will be made by NGS with the advice of the
on-site consulting geologist (or if not on-site consulting geologist is present
at the site, by any third party consulting geologist mutually acceptable to the
parties).

3.3 NGS SUPPORT

NGS agrees to provide sufficient, free and safe access to the Delhi Field and
the NGS facilities located thereon to permit timely performance of the Drilling
Services and field management. NGS may elect to have Verdisys be responsible for
preworking of the well to the described condition set forth in the "Verdisys
Statement of Work", and such services will be invoiced to the operator as an
operating cost. Verdisys will also provide or subcontract necessary "cleanup"

Service Contract - NGS and Verdisys, Inc.                                      2

<PAGE>

of the well and strata as requested by NGS. NGS shall make such requests of
Verdisys with such timing and volume so as to allow efficient operation by
Verdisys.

                              4.0 OTHER AGREEMENTS

4.1 GUARANTY OF FUTURE SERVICES

Verdisys agrees to provide Drilling Services capacity to NGS for future projects
in the following amounts and on the following schedule at its standard fee:

<TABLE>
<S>               <C>
2004              250 wells
2005              500 wells
2006              750 wells
2007 - 2013       1,000 wells per year
</TABLE>

4.2 RECIPROCAL FIRST RIGHT OF REFUSAL

NGS shall have a thirty (30) day, exclusive first right of refusal to review and
enter into an agreement to participate with Verdisys, subject to financing and
normal due diligence, on all oil and gas field projects developed or acquired by
Verdisys. Verdisys further agrees to advise NGS of anticipated projects at
initiation in order for NGS to timely make its election at the reasonably
earliest time.

Similarly, Verdisys shall have a thirty (30) day, exclusive first right of
refusal to provide Drilling Services on any oil and gas field project developed
or acquired by NGS.

                         5.0 WARRANTIES AND LIMITATIONS

5.1 TERMS AND CONDITIONS

All warranties related to Verdisys Lateral Drilling Services are contained in
the separate "Service Level Agreement" (SLA) document included with this
Contract.

5.2 PERFORMANCE

Verdisys will provide a minimum of four laterals per well to at a depth not to
exceed 5800' with laterals horizontal distance not to exceed 300'.

5.3 INDEMNIFICATION

Verdisys, at its own expense, shall indemnify, release and hold harmless NGS,
its subsidiaries, affiliates or assignees, and their directors, officers,
employees and agents and defend any action brought against same with respect to
any claim, demand, cause of action, debt, loss or liability, including
attorneys' fees and court costs, to the extent that it is based upon a claim
that the equipment used or Services provided hereunder infringes or violates any
patents, copyrights, trade secrets, licenses, or other property rights of any
third party. NGS may, at its own expense, assist in such defense if it so
chooses, provided that as long as Verdisys can demonstrate sufficient financial
resources, Verdisys shall control such defense and all negotiations relative to
the settlement of any such claim and further provided that any settlement
intended to bind NGS shall not be final without NGS's written consent, which
shall not be unreasonably withheld. In the event that Verdisys cannot
demonstrate sufficient financial resources to provide such defense, the NGS
shall have the right to advance legal expenses and direct such legal defense.
NGS shall promptly provide Verdisys with written notice of any claim which NGS
believes falls within the scope of this paragraph.

Service Contract - NGS and Verdisys, Inc.                                      3

<PAGE>

Verdisys agrees to indemnify, release, defend and hold harmless NGS for any
liability or expense due to claims for personal injury or property damage (i)
arising out of the furnishing or performance of the equipment or the Services
provided hereunder or (ii) arising out of the fault or negligence of Verdisys,
its employees or agents.

                                6.0 MISCELLANEOUS

6.1 CONFIDENTIALITY

Each party agrees that it shall not disclose to any third party any information
concerning the customers, trade secrets, methods, processes or procedures or any
other confidential business information of the other party which it learns
during the course of its performance of this Contract, without the prior written
consent of such other party. Both parties agree to coordinate and receive
approval from the other party prior to any public announcement related to the
Delhi Field and this Agreement. This obligation will survive the cancellation or
other termination of this Contract.

6.2 GOVERNING LAW

This Contract shall be governed by and construed under the laws of the State of
Delaware or in such other jurisdiction as may be mutually agreed to by NGS and
Verdisys.

6.3 ASSIGNMENT

Either party may assign its rights under this contract with the prior written
notice to the other party, except the Drilling Services undertaken by Verdisys
herein may only be subcontracted or assigned with the prior consent of NGS. This
Contract is binding upon the parties and their successors and assigns.

6.4 AUTHORITY

Each party has all requisite power and authority to execute, deliver and perform
this Agreement. All necessary corporate proceedings of each party have been
taken to authorize the execution, delivery and performance of this Agreement.
This Agreement has been duly authorized, executed and delivered by each party,
constitutes the legal, valid and binding obligation of each party, and is
enforceable in accordance with its terms. Except as set forth elsewhere herein,
no consent, authorization, approval, order, license, certificate, or permit of
or from, or declaration or filing with, any federal, state, local or other
governmental authority or any court or other tribunal is required by either
party for the execution, delivery or performance of this Agreement. No consent
of any party to any contract, agreement, instrument, lease, arrangement or
understanding to which either party is a signer, or to which any of its
properties or assets are subject, is required for the execution, delivery or
performance of this Agreement

6.5 FURTHER ACTIONS

At any time and from time to time, each party agrees, at its expense, to take
such actions and to execute and deliver such documents as may be reasonably
necessary to effectuate the purposes of this Agreement.

6.6 AMENDMENTS

This Agreement sets forth the entire understanding of the parties with respect
to the subject matter hereof and supersedes all existing agreements among them
concerning such subject matter. This Agreement may be amended prior to the
Effective Time (notwithstanding stockholder adoption and approval) by a written
instrument executed by the Constituent Corporations with the approval of their
respective Boards of Directors.

Service Contract - NGS and Verdisys, Inc.                                      4

<PAGE>

6.7 NOTICES

Any notice or other communication required or permitted to be given hereunder
shall be in writing and shall be mailed by certified mail, return receipt
requested, or by Federal Express or similar overnight delivery or courier
service or delivered in person against receipt to the party to whom it is to be
given at the address of such party set forth in the preamble to this Agreement.
Notices hereunder shall be deemed delivered only upon actual delivery against a
signed receipt.

           NATURAL GAS SYSTEMS CORPORATION:   3 Raydon Lane
                                              Houston, Texas 77024
                                              Fax: 832-201-8839

           VERDISYS:                          Verdisys, Inc.
                                              25025 I-45 North, Suite 525
                                              The Woodlands, TX 77380
                                              Fax: ______________
6.8 WAIVER

Any waiver by any party of a breach of any provision of this Agreement shall not
operate as or be construed to be a waiver of any other breach of that provision
or of any breach of any other provision of this Agreement. Any waiver must be in
writing and be authorized by a resolution of the Board of Directors of the
waiving party.

6.9 BINDING EFFECT

The provisions of this Agreement shall be binding upon and inure to the benefit
of the Constituent Corporations and their respective successors and assigns and
shall inure to the benefit of each indemnity.

6.10 SEVERABILITY

If any provision of this Agreement is invalid, illegal or unenforceable, the
balance of this Agreement shall remain in effect, and if any provision is
inapplicable to any person or circumstance, it shall nevertheless remain
applicable to all other persons and circumstances.

6.11 HEADINGS

The headings in this Agreement are solely for convenience of reference and shall
be given no effect in the construction or interpretation of this Agreement.

6.12 COUNTERPARTS

This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.

IN WITNESS WHEREOF, this Agreement has been approved by resolutions duly adopted
by the Board of Directors of each party and has been signed by duly authorized
officers of each party, all as of the date first above written.

NATURAL GAS SYSTEMS CORPORATION         VERDISYS, INC.

By: ________________________            By: ________________________

Title: _____________________            Title: _____________________

Date: ______________________            Date: ______________________

Service Contract - NGS and Verdisys, Inc.                                      5

<PAGE>

                            TERMS AND PRICING INVOICE

                             Effective Date:          , 2003

This Lateral Drilling Service Agreement ("AGREEMENT") is entered into by
Verdisys, Inc., a California corporation ("Verdisys") and NATURAL GAS SYSTEMS
CORPORATION, A DELAWARE CORPORATION ("CUSTOMER") as of the Effective Date
indicated above. This Agreement includes and incorporates the Terms and Pricing
Invoice attached hereto and the following Annexes indicated below and executed
by the parties:

[ ] Service Level Agreement (SLA)           [ ] Statement of Work

[ ] ___________________________         [ ] ________________________

VERDISYS, INC.                              NGS ________________________
("VERDISYS")                                ("CUSTOMER")

BY: ___________________________             BY: ________________________________

NAME:  ________________________             NAME: ______________________________

TITLE: ________________________             TITLE: _____________________________

DATE:  ________________________             DATE: ______________________________

Verdisys Sales Representative or Agent Information

<TABLE>
<S>                                       <C>                     <C>                       <C>
SALES REPRESENTATIVE OR AGENT             PHONE                   FAX                       EMAIL
</TABLE>

Customer Information: IT IS YOUR RESPONSIBILITY TO NOTIFY VERDISYS OF ANY CHANGE
                      IN CONTACT INFORMATION.

<TABLE>
<S>                                                             <C>                                   <C>
PRIMARY BUSINESS CONTACT                                        EMAIL                                 PHONE, WITH AREA CODE

MAILING ADDRESS WITH STREET, CITY, STATE, AND ZIP CODE          FAX, WITH AREA CODE                   CELLULAR, WITH AREA CODE
</TABLE>

Selected Services:

BASE PACKAGE: 4 1/2 OR 3 1/2 INCH WELLS (WITH UP TO  four(4) LATERALS PER WELL):

Minimum Number of Wells:       Fee Per Well    Fee per additional laterals:

120                            65,000.00       $3,750.00     Up to 12   per zone

ADDITIONAL: 2 7/8  INCH WELLS (WITH UP TO  four (4) LATERALS PER WELL):

Number of Wells:               Fee Per Well    Fee per additional laterals:

                               65,000.00       $3,750.00     Up to 12   per zone

PAYMENT SOURCE (IF ANY):  not applicable

ADDITIONAL SERVICES:      Monthly Bandwidth       INSTALLATION FEE PAYMENT TERMS
                          Customer Fee
                          Payment Terms
                          ________

Service Contract - NGS and Verdisys, Inc.                                      6

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.7
<SEQUENCE>10
<FILENAME>h10836aexv10w7.txt
<DESCRIPTION>CONTRACT - EDGE CAPITAL GROUP
<TEXT>
<PAGE>
                                                                    EXHIBIT 10.7

[VERDISYS(TM) LOGO]

                                      VERDISYS, INC.
                                      25025 I-45 NORTH, SUITE 525
                                      THE WOODLANDS, TX 77380
                                      TOLL FREE: (281)364-6999
                                      WEB: WWW.VERDISYS.COM  FAX: (281) 364-8007

                   LATERAL DRILLING SERVICE STANDARD AGREEMENT
                      EDGE CAPITAL GROUP AND VERDISYS, INC.

This Lateral Drilling Services Agreement ("Agreement") is dated as of September
27th, 2003, by and between Verdisys, Inc., a California corporation
("Verdisys"), and Edge Capital Group, a California corporation ("ECG"). Edge
Capital Group ("ECG") seeks to engage Verdisys, Inc. ("Verdisys") to provide
lateral drilling services in ECG's Franklin Gas Field in Franklin, Louisiana
(the "Franklin Field").

1.0 LATERAL DRILLING

1.1 LOCATION OF SERVICES

Verdisys will provide lateral drilling to pay zones within ECG's existing well
base in the Franklin Field identified with greater specificity as to location on
the attached Term and Pricing Invoice, which may be updated by the constituent
corporations from time to time.

1.2 PARAMETERS OF DRILLING

Laterals will be drilled at a depth of no more than 5800' with a horizontal
maximum of 300'.

2.0 SERVICE FEES AND ROYALTY

2.1 LATERAL DRILLING SERVICE FEES

Verdisys Lateral Drilling Services ("Drilling Services") will be billed at the
time of commencement of drilling at the package rate set forth in the attached
Term and Pricing Invoice. The Drilling Services are for each individual well
site pertaining to this Contract. ECG shall receive the Drilling Services at the
minimum number of wells and at the prices identified on the Term and Pricing
Invoice attached hereto. Verdisys will bill ECG upon completion of each
individual well, including any additional laterals requested, with payment due
upon completion of the well based upon financing provided by a to be determined
third party lender. Drilling will be done in eight (8) well segments for a total
of 100 wells.

2.2 PAYMENT TO SECURE FRANKLIN FIELD AND FINANCING

ECG hereby agrees to purchase the Franklin Field from Verdisys within ten (10)
days of the date of this contract with a payment of $200,000.00. ECG will also
be responsible to provide any financial guarantees necessary to establish
financing for drilling enhancement revenues paid to Verdisys..

Service Contract - ECG and Verdisys, Inc.                                      1
<PAGE>

2.3 ROYALTY

In addition to the fee for Drilling Services, Verdisys shall receive a 66 2/3%
interest in the net operating income from ECG's Franklin Gas Properties (the
"Verdisys Royalty"). The Verdisys Royalty will be calculated as 66 2/3% of the
net lease after recovery by ECG and/or its third party financing sources of
ECG's costs related to the Drilling Services, including principal, interest,
fees and costs for financing such Drilling Services; landowner royalties or
other royalties to third parties other than ECG or Verdisys; and field operating
costs.

To provide for payment of the Verdisys Royalty, ECG will secure for Verdisys a
66 2/3% listing with Shiloh Resources (the "Gatherer") for direct payment of
proceeds after the development of the field (horizontally) and Drilling Services
has been completed, all costs plus 10% have been received by ECG, Verdisys will
then receive said 66 2/3% royalty of said net lease.

Verdisys shall not be directly or indirectly liable or obligated in any way to
ECG or to any third party for any financing or other payment obligations related
to the Drilling Services, including principal, interest, fees or other costs
related thereto. The obligations of Verdisys are specifically limited to
compliance with the terms of this agreement related to the assignment of funds
by Verdisys to the Drilling Services Financing Escrow Account for the limited
time period described herein.

ECG will remain operator, but will subcontract to Verdisys the management and
operation of the Franklin field. On a monthly basis, Verdisys will be reimbursed
for 33 1/3% of mutually agreed to field operating costs by ECG for the preceding
month's expenses, such costs to include management personnel, office costs,
pumping, maintenance, repair, and any other costs reasonably related to field
production and management.

3.0 RESPONSIBILITIES OF PARTIES

3.1 VERDISYS SERVICES

Verdisys will provide lateral drilling to a depth of 5800' in the existing well
structure with four (4) laterals to a maximum horizontal distance of 300' from
the center of the well bore.

3.2 THIRD PARTY SERVICES

ECG hereby agrees that to the extent that third party services are reasonably
determined by Verdisys as needed to maximize the results of the Drilling
Services or the overall output from the Franklin field, ECG will be responsible
for twenty percent (25%) of all costs related to these services.

The determination as to the appropriate number of laterals to be drilled to
obtain maximum return from the well will be made by the on-site consulting
geologist (or if not on-site consulting geologist is present at the site, by any
third party consulting geologist mutually acceptable to the parties).

3.3 ECG SUPPORT

ECG agrees to provide sufficient, free and safe access to the Franklin Field and
the ECG facilities located thereon to permit timely performance of the Drilling
Services and field management. Verdisys is responsible for preworking of the
well to the described condition set forth in the "Verdisys Statement of Work",
and will bill such services to ECG as an operating cost. Verdisys will also
provide or subcontract necessary "cleanup" of the well and strata.

Service Contract - ECG and Verdisys, Inc.                                      2
<PAGE>

4.0 WARRANTIES AND LIMITATIONS

4.1 TERMS AND CONDITIONS

All warranties related to Verdisys Lateral Drilling Services are contained in
the separate "Service Level Agreement" (SLA) document included with this
Contract.

4.2 PERFORMANCE

Verdisys will provide a minimum of four laterals per well to at a depth not to
exceed 5800' with laterals horizontal distance not to exceed 300'.

4.3 INDEMNIFICATION

Verdisys, at its own expense, shall indemnify, release and hold harmless ECG,
its subsidiaries, affiliates or assignees, and their directors, officers,
employees and agents and defend any action brought against same with respect to
any claim, demand, cause of action, debt, loss or liability, including
attorneys' fees and court costs, to the extent that it is based upon a claim
that the equipment used or Services provided hereunder infringes or violates any
patents, copyrights, trade secrets, licenses, or other property rights of any
third party. ECG may, at its own expense, assist in such defense if it so
chooses, provided that as long as Verdisys can demonstrate sufficient financial
resources, Verdisys shall control such defense and all negotiations relative to
the settlement of any such claim and further provided that any settlement
intended to bind ECG shall not be final without ECG' written consent, which
shall not be unreasonably withheld. In the event that Verdisys cannot
demonstrate sufficient financial resources to provide such defense, the ECG
shall have the right to advance legal expenses and direct such legal defense.
ECG shall promptly provide Verdisys with written notice of any claim which ECG
believes falls within the scope of this paragraph.

Verdisys agrees to indemnify, release, defend and hold harmless ECG for any
liability or expense due to claims for personal injury or property damage (i)
arising out of the furnishing or performance of the equipment or the Services
provided hereunder or (ii) arising out of the fault or negligence of Verdisys,
its employees or agents.

5.0 MISCELLANEOUS

5.1 CONFIDENTIALITY

Each party agrees that it shall not disclose to any third party any information
concerning the customers, trade secrets, methods, processes or procedures or any
other confidential business information of the other party which it learns
during the course of its performance of this Contract, without the prior written
consent of such other party. This obligation will survive the cancellation or
other termination of this Contract.

5.2 GOVERNING LAW

This Contract shall be governed by and construed under the laws of the State of
California.

5.3 ASSIGNMENT

Service Contract - ECG and Verdisys, Inc.                                      3
<PAGE>

Either party may assign its rights under this contract with the prior written
notice to the other party, except the management responsibilities undertaken by
Verdisys herein may only be subcontracted or assigned with the prior consent of
ECG. This Contract is binding upon the parties and their successors and assigns.

5.4 AUTHORITY

Each party has all requisite power and authority to execute, deliver and perform
this Agreement. All necessary corporate proceedings of each party have been
taken to authorize the execution, delivery and performance of this Agreement.
This Agreement has been duly authorized, executed and delivered by each party,
constitutes the legal, valid and binding obligation of each party, and is
enforceable in accordance with its terms. Except as set forth elsewhere herein,
no consent, authorization, approval, order, license, certificate, or permit of
or from, or declaration or filing with, any federal, state, local or other
governmental authority or any court or other tribunal is required by either
party for the execution, delivery or performance of this Agreement. No consent
of any party to any contract, agreement, instrument, lease, arrangement or
understanding to which either party is a signer, or to which any of its
properties or assets are subject, is required for the execution, delivery or
performance of this Agreement

5.5 FURTHER ACTIONS

At any time and from time to time, each party agrees, at its expense, to take
such actions and to execute and deliver such documents as may be reasonably
necessary to effectuate the purposes of this Agreement.

5.6 AMENDMENTS

This Agreement sets forth the entire understanding of the parties with respect
to the subject matter hereof and supersedes all existing agreements among them
concerning such subject matter. This Agreement may be amended prior to the
Effective Time (notwithstanding stockholder adoption and approval) by a written
instrument executed by the Constituent Corporations with the approval of their
respective Boards of Directors.

5.7 NOTICES

Any notice or other communication required or permitted to be given hereunder
shall be in writing and shall be mailed by certified mail, return receipt
requested, or by Federal Express or similar overnight delivery or courier
service or delivered in person against receipt to the party to whom it is to be
given at the address of such party set forth in the preamble to this Agreement.
Notices hereunder shall be deemed delivered only upon actual delivery against a
signed receipt.

                  ECG:                      Mr. Scott A. Sossen
                                            Edge Capital Group, Inc.
                                            22349  La Palma Ave. #d110
                                            Yorba Linda, California

                  VERDISYS:                 Verdisys, Inc.
                                            25025 I-45 North, Suite 525
                                            The Woodlands, TX  77380

5.8 WAIVER

Any waiver by any party of a breach of any provision of this Agreement shall not
operate as or be construed to be a waiver of any other breach of that provision
or of any breach of any other

Service Contract - ECG and Verdisys, Inc.                                      4
<PAGE>

provision of this Agreement. Any waiver must be in writing and be authorized by
a resolution of the Board of Directors of the waiving party.

5.9 BINDING EFFECT

The provisions of this Agreement shall be binding upon and inure to the benefit
of the Constituent Corporations and their respective successors and assigns and
shall inure to the benefit of each indemnity.

5.10 SEPARABILITY

If any provision of this Agreement is invalid, illegal or unenforceable, the
balance of this Agreement shall remain in effect, and if any provision is
inapplicable to any person or circumstance, it shall nevertheless remain
applicable to all other persons and circumstances.

5.11 HEADINGS

The headings in this Agreement are solely for convenience of reference and shall
be given no effect in the construction or interpretation of this Agreement.

5.12 COUNTERPARTS

This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.

IN WITNESS WHEREOF, this Agreement has been approved by resolutions duly adopted
by the Board of Directors of each party and has been signed by duly authorized
officers of each party, all as of the date first above written.

EDGE CAPITAL GROUP                  VERDISYS, INC.

By: ______________________          By: ______________________

Title: _____________________        Title: _____________________

Date: ______________                Date: _____________

Service Contract - ECG and Verdisys, Inc.                                      5
<PAGE>

                            TERMS AND PRICING INVOICE

                      Effective Date: September 27th, 2003

This Lateral Drilling Service Agreement ("AGREEMENT") is entered into by
Verdisys, Inc., a California corporation ("Verdisys") and EDGE CAPITAL GROUP, A
CALIFORNIA CORPORATION ("CUSTOMER") as of the Effective Date indicated above.
This Agreement includes and incorporates the Terms and Pricing Invoice attached
hereto and the following Annexes indicated below and executed by the parties:

[ ] Service Level Agreement (SLA)             [ ] Statement of Work

[ ] ________________________              [ ] _________________________

VERDISYS, INC.                                Edge Capital Group
("VERDISYS")                                  ("CUSTOMER")

BY: ___________________________________       BY: ______________________________

NAME: Dan Williams                            NAME: Scott Sossen

TITLE: PRESIDENT AND CEO                      TITLE: CEO

DATE: 9/27/03                                 DATE: 9/27/03

Verdisys Sales Representative or Agent Information

<TABLE>
<CAPTION>
SALES REPRESENTATIVE OR AGENT             PHONE            FAX          EMAIL
<S>                                       <C>              <C>          <C>
</TABLE>

Customer Information: IT IS YOUR RESPONSIBILITY TO NOTIFY VERDISYS OF ANY CHANGE
IN CONTACT INFORMATION.

<TABLE>
<S>                                                        <C>                        <C>
PRIMARY BUSINESS CONTACT                                   EMAIL                      PHONE, WITH AREA CODE

MAILING ADDRESS WITH STREET, CITY, STATE, AND ZIP CODE     FAX, WITH AREA CODE        CELLULAR, WITH AREA CODE
</TABLE>

Selected Services:

BASE PACKAGE: 4 1/2 OR 3 1/2 INCH WELLS (WITH UP TO four (4) LATERALS PER WELL):

<TABLE>
<CAPTION>
Minimum Number of Wells:         Fee Per Well            Fee per additional laterals:
- --------------------------------------------------------------------------------------
<S>                              <C>                   <C>
         100                      65,000.00            $3,750.00    Up to 12  per zone
</TABLE>

ADDITIONAL: 2 7/8 INCH WELLS (WITH UP TO four (4) LATERALS PER WELL):

<TABLE>
<CAPTION>
Number of Wells:                 Fee Per Well            Fee per additional laterals:
- --------------------------------------------------------------------------------------
<S>                              <C>                   <C>
                                  65,000.00            $3,750.00    Up to 12  per zone
</TABLE>

PAYMENT SOURCE (IF ANY): not applicable

ADDITIONAL SERVICES:     Monthly Bandwidth       INSTALLATION FEE PAYMENT TERMS
                         Customer Fee
                         Payment Terms
                         _____


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.8
<SEQUENCE>11
<FILENAME>h10836aexv10w8.txt
<DESCRIPTION>CONTRACT - APACHE CORP.
<TEXT>
<PAGE>

                                                                    EXHIBIT 10.8

VERDISYS

                                                       Verdisys, Inc.
                                                       65 Enterprise
                                                       Aliso Viejo, CA 92656
                                                       Toll Free: (949) 330-7710
                                                       Web: www.verdisys.com

                                SERVICE CONTRACT
                         APACHE CORP. AND VERDISYS, INC

                               September 11, 2002

SCOPE OF PROJECT

Apache Corporation ("Apache") would like to engage Verdisys, Inc. ("Verdisys")
to provide high-speed satellite connectivity to remote operations within the
United States.

1.0 SATELLITE SYSTEMS

1.1 VERDISYS SATELLITE RETURN SYSTEMS

Verdisys will provide shipments and installation of (4) four Verdisys SkyStar
satellite return systems to sites in South Texas and Louisiana chosen by Apache.

       SkyStar VSAT Outdoor Equipment:      SkyStar VSAT Indoor Equipment:
         1.2-m antenna                        IFL cable, RG6 and RG8
         1 W linear TXB                       SkyStar broadband VSAT
         LNB and Feed Assembly

2.0 BANDWIDTH SERVICES (ALL - INCLUSIVE LEASE RENTAL)

2.1 MONTHLY BANDWIDTH SERVICE

Monthly bandwidth services will be billed at a rate of $252.20* on a 36-month
contract.

*Bandwidth, Hardware, Install, Shipping & Handling, Training and Taxes all
included.

     ALL INCLUSIVE LEASE RENTAL PRICING (NO UPFRONT COST)

       512 - 250            128 - 60               $252.20*

     * Hardware, Bandwidth, Install, Shipping & Handling and Taxes all included.

3.0 RESPONSIBILITIES OF PARTIES

3.1 VERDISYS SUPPORT

Verdisys will provide support for the satellite return systems and the basic
connectivity, to the point of connection to Apache's computer, server, port, hub
or VPN router.

3.2 APACHE SUPPORT

Apache agrees to provide sufficient, free and safe access to Apache facilities
to permit timely installation of products and/or performance of services. Apache
is responsible for integration and interconnection of Verdisys products and
services with Apache's internal networks.

4.0 WARRANTIES AND LIMITATIONS

4.1 TERMS AND CONDITIONS

All warranties related to Verdisys hardware and Verdisys services are contained
in the separate SLA document included with this Contract.

4.2 PERFORMANCE

Verdisys will provide business class bandwidth systems with 5 static IP
addresses per site.

Proposal Order and Service Contract - Apache and Verdisys, Inc.                1
<PAGE>

FOR VERDISYS:                               Dan Williams
                                            Verdisys, Inc.
                                            65 Enterprise
                                            Aliso Viejo, CA 92656
                                            (949) 330-7710

FOR APACHE CORP.:                           Norm Hagen
                                            Apache Corp.
                                            2000 Post Oak Blvd., Suite 100
                                            Houston, Texas 77056-4400

SIGNATURES:

APACHE CORP.                                     VERDISYS, INC.
By: Norman G. Hagen                              By: Dan Williams
Signature /s/ Norman G. Hagen                    Signature /s/ Dan Williams
          --------------------                             -------------------
Date: 10/30/2002                                 Date: 11/1/02

Proposal Order and Service Contract - Apache and Verdisys, Inc.                2

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.9
<SEQUENCE>12
<FILENAME>h10836aexv10w9.txt
<DESCRIPTION>CONTRACT - NOBLE ENERGY
<TEXT>
<PAGE>

                                                                    EXHIBIT 10.9

[VERISYS LOGO]

                                                    Verdisys, Inc.
                                                    25025 I-45 North, Suite 525
                                                    The Woodlands, TX 77380
                                                    Toll Free: (281) 364-8999
                                                    Web: www.verdisys.com

                                SERVICE CONTRACT
                                       and
                               EQUIPMENT ADDENDUM
                      NOBLE ENERGY, INC. AND VERDISYS, INC

                               September 17, 2003

SCOPE OF PROJECT

Noble Energy, Inc. ("Noble") would like to engage Verdisys, Inc. ("Verdisys") to
provide  high-speed  satellite  connectivity to offshore sites within the United
States.

1.0 SATELLITE SYSTEMS

Verdisys will provide shipments and installation of twenty (20) V-Multi
satellite return systems to sites chosen by Noble. All units will be installed
on offshore platforms.

   V-Multi VSAT Outdoor Equipment:   V-Multi VSAT Indoor Equipment:

     1. Non-penetrating mount           1. IFL cable, RG6 and RG8

     2. 1.8M for offshore               2. V-Multi broadband VSAT

     3. 2 W linear TXB                  3. External Power Supply (if necessary)

     4. LNB and Feed Assembly

1.1 OFFSHORE HARDWARE AND INSTALLATION

               IDU, ODU & antenna                              1.8 m

               IDU, ODU complete system                  $  4,195.00
               Shipping                                  $    250.00
               Installation                              $  1,200.00*
               Applicable taxes                          $    356.57

               *Noble will provide transportation to the platform

2.0 TERM OF CONTRACT AND BANDWIDTH SERVICES

Bandwidth services ("Services") will be billed quarterly at a the monthly rate
depicted below. The term of the Services is 36-months for all sites pertaining
to this contract; Billing for each system will commence when system is installed
and service provided. Monthly recurring cost will reflect total units installed.

20 V-Multi VSAT Units     512Kbps / 128Kbps      $ 142.00   . 35 GB per Month**

** $.38 Per MB charge for bandwidth use over the GB Transfer Allowance.

- --------------
Service Contract - Noble and Verdisys, Inc.                                    1

<PAGE>

3.0 RESPONSIBILITIES OF PARTIES

3.1 VERDISYS SUPPORT

Verdisys will provide support for the satellite return systems and the basic
connectivity, to the point of connection to Noble's computer, server, port, hub
or VPN router.

3.2 NOBLE SUPPORT Noble agrees to provide sufficient, free and safe access to
Noble facilities to permit timely installation of products and/or performance of
services. Noble is responsible for integration and interconnection of Verdisys
products and services with Noble's internal networks.

4.0 WARRANTIES AND LIMITATIONS

4.1 TERMS AND CONDITIONS

All warranties related to Verdisys hardware and Verdisys services are contained
in the separate "Service Level Agreement" (SLA) and "Agreement with Verdisys"
documents included with this Contract.

4.2 PERFORMANCE

Verdisys will provide business class bandwidth systems with 5 static IP
addresses. See attached SLA for network performance outline.

4.3 WARRANTIES

Verdisys hereby warrants and represents as follows:

(a) Ownership. Verdisys is the owner of the equipment and any and all rights to
the equipment that it is providing to Noble and it may provide that equipment
without violating the rights of any third party, and there is currently no
actual or threatened suit by any third party based upon any alleged violation of
any such right by Verdisys;

(b) Warranty Period. For a period of three (3) years from the date of this
Contract, the equipment shall be (i) free from defects and material and
workmanship under normal use and remain in good working order, (ii) function
properly and conformity with this warranty and any other warranties that may be
contained in the SLA or agreement with Verdisys.

4.4 INDEMNITY

Verdisys, at its own expense shall indemnify, release and hold harmless Noble,
its subsidiaries, affiliates or assignees, and their directors, officers,
employees and agents and defend any action brought against same with respect to
any claim, demand, cause of action, debt, loss or liability, including
attorneys' fees and court costs, to the extent that it is based upon a claim
that the equipment used of the Services provided hereunder infringes or violates
any patents, copyrights, trade secrets, licenses, or other property rights of
any third party. Noble may, at its own expense, assist in such defense if it so
chooses, provided that as long as Verdisys can demonstrate sufficient financial
resources, Verdisys shall control such defense and all negotiations relative to
the settlement of any such claim and further provided that any settlement
intended to bind Noble shall not be final without Noble's written consent, which
shall not be unreasonably withheld. Noble shall promptly provide Verdisys with
written notice of any claim which Noble believes falls within the scope of this
paragraph.

Verdisys agrees to indemnify, release, defend and hold harmless Noble for any
liability or expense due to claims for personal injury or property damage (i)
arising out of the furnishing or performance of the equipment or the Services
provided hereunder or (ii) arising out of the fault or negligence of Verdisys,
its employees or agents.

Service Contract - Noble and Verdisys, Inc.                                    2

<PAGE>

4.5 THIRD PARTY SOFTWARE AND HARDWARE

Verdisys hereby agrees that, to the extent the equipment or Services as provided
by Verdisys requires the use of third party rights to hardware and/or software
(the "Third Party"), Verdisys shall at its sole cost maintain the rights to use
a currently supported version of such Third Party Software or Hardware, and
procure similar rights for Noble as necessary for Noble's permitted use
thereunder. If such Third Party Software or Hardware is no longer available or
supported, or Verdisys cannot procure the rights described in the prior
sentence, Verdisys shall promptly and at its sole cost procure replacement
software for the Third Party Software or Hardware and the necessary rights
therein for Noble so as to provide Noble with uninterrupted functionality of the
equipment and services.

4.6 CONFIDENTIALITY

Each party agrees that it shall not disclose to any third party any information
concerning the customers, trade secrets, methods, processes or procedures or any
other confidential business information of the other party, which it learns
during the course of its performance of this Contract, without the prior written
consent of such other party. This obligation shall survive the cancellation or
other termination of this Contract.

4.7 GOVERNING LAW

This Contract shall be governed by and construed under the laws of the State of
Texas.

4.8 ASSIGNMENT

Either party may assign its rights under this contract with the prior written
notice to the other party and this Contract is binding upon the parties and
their successors and assigns.

NOBLE ENERGY, INC.                               VERDISYS, INC.
Noble Energy, Inc.                               Dan Williams, President and CEO
350 Glenborough Suites 100                       Verdisys, Inc.
Houston TX 77067                                 25025 I-45 North, Suite 525
                                                 The Woodlands, TX 77380

NOBLE ENERGY, INC.                               VERDISYS, INC.

By: /s/                                          By: /s/ Dan Williams
    --------------------------------                 ---------------------------
Signature                                        Signature

Date: 9/26/03                                    Date: 9/30/03

Service Contract - Noble and Verdisys, Inc.                                    3

<PAGE>

                     V - INDUSTRIAL SERVICE LEVEL AGREEMENT

PERFORMANCE MEASUREMENT. For each of the Service Level Agreements (SLAs) listed
below, the measurements of all applicable durations shall be based on the time
stamps generated by the Verdisys trouble ticket tracking and reporting system.
As such, individual remote outage durations shall be deemed to start upon
opening of an applicable trouble ticket, and shall be deemed closed when the
ticket is closed in accordance with Verdisys' trouble resolution procedures.

SLA APPLICABILITY. Verdisys SLAs apply to the relationship between Verdisys and
Reseller, Customer or End User as described per this agreement or the "Agreement
With Verdisys" document. SLA terms and provisions are transferable upon
notification to Verdisys and are considered Confidential Controlled information.

SLA EXCEPTIONS. Verdisys will be relieved of its Service Level Agreements to the
extent that any service interruptions are due to any of the following:

         -        Failure of interruption of service due to the failure or
                  non-performance of any terrestrial backhaul equipment or
                  connections;

         -        Action or inaction by Reseller, Customer(s), or End User(s),
                  or their employees, invitees, third parties, including, but
                  not limited to, changes in applications and protocols, or
                  transmission parameters from those tested and approved by
                  Verdisys;

         -        Maintenance Exclusions;

         -        Reseller, Customer or End Uses scheduled and approved downtime
                  (maintenance, upgrades, etc.);

         -        Breach of this Agreement by Reseller, Customer or End User;

         -        Inability to service a Site due to access restrictions of
                  Reseller, Customer(s) or End User(s); and

         -        Any other cause beyond Verdisys' control to include but not
                  limited to those actions set forth under the Force Majeure
                  provision of this Agreement or the "Agreement With Verdisys";
                  or failure or unavailability of Reseller's data center or
                  equipment not provided by Verdisys.

VERDISYS                              6/22/02                                  1

<PAGE>

                       SERVICE LEVEL AGREEMENT COMMITMENTS

A. NETWORK AVAILABILITY

Definition        Percentage of time the VSATs, satellite and hub are in service
                  and available to support duplex data communications.

Specification     99.7%

Measurement       Number of total actual Verdisys network minutes per month
                  divided by total possible number of network service minutes,
                  tallied and averaged on a rolling 12-month basis.

A. NETWORK MEAN TIME TO REPAIR

Definition        Average time to restore hub to operational service following
                  an outage.

Specification     Six hours

Measurement       Total elapsed time for restoration of all hub outages during a
                  calendar month, measured from event start to event end for
                  each event, divided by the number of discreet events.

B. MAXIMUM NETWORK OUTAGE DURATION

Definition        Maximum outage duration for an individual hub outage from
                  event start to event end.

Specification     Twelve hours

Measurement       Total elapsed time from start of outage to restoration of
                  service.

VERDISYS                              6/22/02                                  2

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.10
<SEQUENCE>13
<FILENAME>h10836aexv10w10.txt
<DESCRIPTION>TECHNOLOGY REPORT "LANDERS TECHNOLOGY"
<TEXT>
<PAGE>
                                                                   EXHIBIT 10.10


SUMMARY REPORT
UPDATED ASSESSMENT OF THE LANDERS HORIZONTAL JETTING TECHNOLOGY

Prepared For:

VERDISYS, INC.
10600 North De Anza Boulevard, Suite 250
Cupertino, CA 95014

October 13, 2003

DAI Project No. J90203

Prepared By:

Noel L. Daniel, LPG
Consulting Geologist

DANIEL & ASSOCIATES, INC.
11110 Indian Lake Boulevard
Indianapolis, IN 46236-9384                  (317) 894-8614
<PAGE>

October 13, 2003

Mr. Andrew Wilson
Chief Financial Officer
Verdisys, Inc.
10600 North De Anza Boulevard, Suite 250
Cupertino, CA 95014

RE:      SUMMARY REPORT
         UPDATED ASSESSMENT OF THE LANDERS HORIZONTAL JETTING TECHNOLOGY
         DAI PROJECT NO. J90203

Dear Mr. Wilson:

An updated assessment of the Landers Horizontal Jetting technology (HJT)
developed and patented by Mr. Carl Landers of Landers Horizontal Drill,
Inc./Advanced Petroleum Enhancement, Inc. has been completed by Daniel and
Associates, Inc. (DAI). This summary report has been prepared in accordance with
the proposed scope of work as outlined in DAI Proposal No. P90203 to our Client,
Verdisys, Inc., dated September 4, 2003. The proposal was approved by Verdisys,
Inc. on September 4, 2003 via email and retainer fee on September 5, 2003.

The assessment was conducted on a best efforts basis and represents a
professional opinion after evaluation of information furnished by several
parties and a site visit to observe field observations of the horizontal jetting
technology used in an actual oilfield project near Oil City, Louisiana.

The opportunity to be of service to Verdisys, Inc. in this important project is
greatly appreciated.


Sincerely,

DANIEL & ASSOCIATES, INC.

Noel L. Daniel, LPG
Consulting Geologist
<PAGE>

                                TABLE OF CONTENTS

DISCLAIMER STATEMENT

EXECUTIVE SUMMARY

1.0      INTRODUCTION

2.0      SUMMARY OF THE PATENTED LANDERS HORIZONTAL DRILLING TECHNOLOGY

3.0      UPDATED REVIEW OF THE LANDERS HORIZONTAL DRILLING TECHNOLOGY
         PERFORMANCE

         3.1      UPDATED REVIEW OF THE HORIZONTAL DRILL TECHNOLOGY FROM
                  SELECTED LHD SERVICE PROJECTS

         3.2      PREVIOUS REVIEW OF THE HORIZONTAL DRILL TECHNOLOGY FROM
                  SELECTED LHD SERVICE PROJECTS

4.0      MARKET VIABILITY OF THE TECHNOLOGY

5.0      SUMMARY OPINION

                  5.1      CONCLUSIONS

                  5.2      RECOMMENDATIONS

APPENDICES

APPENDIX 1-OIL AND GAS WELL PRODUCTION RECORDS FROM VARIOUS STATE GEOLOGIC
           SURVEY AGENCIES

APPENDIX 2-SELECTED PRODUCTION CURVES FROM HJT TREATED OIL AND GAS WELLS

APPENDIX 3-AFFIDAVITS

APPENDIX 4-RESUME OF NOEL DANIEL
<PAGE>

                              DISCLAIMER STATEMENT

This document was prepared for Verdisys, Inc, the only intended beneficiary of
our work. No other party should rely on the information contained herein without
prior written consent of Verdisys, Inc.

In preparation of this report, DANIEL & ASSOCIATES, INC. has applied generally
accepted professional practices and standards of performance in exercising its
professional judgment, skills, and care in a manner consistent with that of
other professionals performing similar work under similar conditions. All
information, conclusions, and recommendations in this report are necessarily
governed by the recommended Scope of Work, availability and reliability of
information furnished to DANIEL & ASSOCIATES, INC. by various governmental
sources, oil and gas operators, and others. Due to the nature of the work,
however, DANIEL & ASSOCIATES, INC. does not assume and specifically disclaims
any and all responsibility and/or liability for damages of any kind suffered by
any individual or entity arising from DANIEL & ASSOCIATES, INC. professional
acts, errors and/or omissions related in any way to the work performed in the
preparation of this report or any reliance on this report or action undertaken
in reliance on this report. No warranties, expressed or implied, are given or
made.
<PAGE>

       AN UPDATED ASSESSMENT OF THE LANDERS HORIZONTAL DRILLING TECHNOLOGY

                             DAI PROJECT NO. J90203
                                OCTOBER 13, 2003

EXECUTIVE SUMMARY

This report summarizes the results of an updated assessment of the Landers
Horizontal Drilling Technology (LHD) conducted by Daniel & Associates, Inc.
(DAI). DAI was retained by Verdisys, Inc. to prepare the report. The purpose of
this project was to review and update the overall performance of the technology
since the initial assessment was made by DAI in a report entitled, Project
Summary Report, Assessment of the Landers Horizontal Drill Technology, dated
August 21, 2000. The assessment was conducted on a best efforts basis and
represents a professional opinion after evaluation of information furnished by
several documented sources and field observations of the horizontal drilling
technology used in an actual oil field project near Oil City, Louisiana.

In conclusion, it is the author's professional opinion that the patented LHD
technology has been demonstrated to be technically sound. The technology will
not always produce favorable results of increased oil and gas production due to
subsurface factors beyond the control of the technology. If the reservoirs have
been severely depleted or negatively impacted in some manner, the technology
will not benefit the operator. For the most part, the technology should perform
favorably in most oil and gas wells that have potential for improved reservoir
characteristics. In conjunction with well planned and executed reservoir
enhancement treatments, the LHD technology has been successfully demonstrated to
enhance oil and gas production in wells that otherwise were under performing.
While there is a need for refinement of the technology through continued
research and development, it is my opinion that the LHD technology has
substantial value as a relatively low cost means of enhancing oil and gas
production in the U.S. and the oil producing nations of the world.

This project has resulted in an updated evaluation of the LHD technology market
viability and concludes that: 1) the LHD technology can reliably attain the
marketplace driven goal of enhanced oil and gas productivity; and 2) the
marketplace will respond to the LHD technology if it is reasonably priced.

Based on the author's consideration of information reviewed concerning the LHD
technology and market viability, the following recommendations are respectively
submitted:

         -        It is recommended that routine information on every oil and
                  gas well serviced by the LHD technology be recorded in a file
                  format suitable for future reference and evaluation; this will
                  be especially important as the technology grows in usage by
                  the industry; information management will become vital.

<PAGE>

         -        As a service sector product, the LHD technology should be
                  priced to offer benefits to the small independent operator as
                  well as the larger independents and major oil companies;
                  pricing will drive market growth, especially for the next 2-3
                  years with the smaller independents; as the service continues
                  to demonstrate reliability and positive results, the larger
                  independents and majors will likely become more likely to
                  utilize it; pricing will become secondary as compared to
                  increased productivity.

         -        It is recommended that a strong marketing program be developed
                  to approach the larger independents and major oil companies;
                  while slow to accept new technologies in the petroleum
                  industry, the larger firms will eventually accept the LHD
                  technology once demonstrated by a few of the more well known
                  firms.

         -        It is the author's opinion that the greatest strength
                  represented by the LHD technology is to use it to create oil
                  and gas production deals; It is recommended that growth
                  emphasis be placed more on use of the technology to acquire
                  and participate in oil and gas development projects that lend
                  themselves to this technology. The real value of this
                  technology is using it to create future opportunities.

1.0      INTRODUCTION

The purpose of this project was to provide a qualified independent updated
assessment for Verdisys, Inc. of the technical viability of the patented Landers
Horizontal Drill technology (LHD). The LHD technology was originally developed
for the enhancement of oil and gas production in the petroleum industry by Mr.
Carl Landers, inventor of the technology. The scope of work implemented by
DANIEL & ASSOCIATES, INC. (DAI) for this project consisted of the following key
components:

         X        An updated review of Mr. Landers's patented LHD technology as
                  applicable to the petroleum industry;

         X        Review of selected past LHD service projects;

                                       2

<PAGE>

         X        Field observation of an actual LHD oil and gas project in
                  Louisiana;

         X        Assessment of the LHD service pricing criteria;

         X        Evaluation of market viability of the technology; and;

         X        Summary conclusions, recommendations, and professional
                  opinion.

2.0      SUMMARY OF LHDI'S PATENTED HORIZONTAL DRILLING TECHNOLOGY

The development of the Landers Horizontal Drill (LHD), according to Mr. Carl
Landers of Landers Horizontal Drill, Inc. (LHDI), the inventor of record, came
about directly as a result of the need to drill inexpensive horizontal borings
(referred to as lateral borings) through oil well casing or open hole into
surrounding reservoir rock. The LHD technology was developed to offer a cost
effective, portable, and practical well field service alternative to more
expensive, traditional reservoir enhancement technologies including
whip-stocking and horizontal drilling. The intent of the LHD technology has been
to provide a low cost approach in increasing oil and gas production. The well
bore radius can be effectively increased laterally by jetting multiple channels
to an approximate distance of 300 feet from the vertical well bore. Reservoir
stimulation can be effectively enhanced by applications of traditional formation
fracturing and acid treatment applied to each of the laterals.

Patents for the LHD technology by Carl Landers were approved by the U.S. Patent
Office in May 9, 1995 (Patent No. 5,413,184) and December 29, 1998 (Patent No.
5,853,056). Both patents cover methodology and apparatus for horizontal well
drilling. A partial excerpt summary of the invention from the U.S. Patent
document 5,853,056 for the patents is included as follows:

                                       3

<PAGE>

METHOD OF AND APPARATUS FOR HORIZONTAL WELL DRILLING (SUMMARY OF THE INVENTION)

"The present invention is directed to a method and apparatus for penetrating a
well casing and surrounding earth strata. Furthermore, the present invention is
directed to a method of penetrating a well casing and surrounding earth strata
utilizing a two-step process wherein a flexible shaft having a ball cutter on
one end thereof is used to make a cut through a well casing and a pre-cut into
the earth's strata surrounding the well casing and the second step involves the
use of a flexible tube having a nozzle blaster on the end thereof which is then
inserted down the well casing into the pre-cut and in combination with a high
pressure fluid pumped through the flexible tube and out through the nozzle
blaster, a horizontal extension of the pre-cut can then be made up to a distance
of more than 200 feet (61 m). The upset tubing can then be turned from the
surface 90o to repeat the process in another direction. One can then cut another
hole through the casing and repeat the process up to 4 directions on one level.
Many levels can be opened with the same procedure. The invention has application
in drilling oil, gas, or water, for example."

3.0      UPDATED REVIEW OF THE LANDERS HORIZONTAL DRILLING TECHNOLOGY
         PERFORMANCE

3.1      PREVIOUS DAI REVIEW OF THE HORIZONTAL DRILL TECHNOLOGY FROM SELECTED
         LHD SERVICE PROJECTS

The material presented in this section was previously included in the DAI report
entitled, Assessment of Horizontal Jetting Technology, dated August 21, 2000,
DAI Project No. J81600. It is included again in this report to provide
continuity of information in the original report and

                                       4

<PAGE>

information and opinions presented in this report.

The following tabularized petroleum well test results have been obtained from
information supplied to Carl Landers from selected customers who have utilized
the Lander Horizontal Drill technology in various petroleum reservoirs. These
LHD test programs have been conducted by 5 independent oil producers in a wide
variety of production depths, reservoir lithologies, and regional locations in
the U.S. The reported LHD test results are somewhat varied in results. Generally
the LHD process of reservoir enhancement demonstrated the ability to drill
horizontal lateral borings at distances in the range of 200-400 feet with noted
improvement in petroleum production rates in several of the oil wells as
compared to production rates prior to LHD treatment.

3.1      UPDATED REVIEW OF THE LANDERS HORIZONTAL DRILLING TECHNOLOGY FROM
         SELECTED SERVICE PROJECTS

WELLINGTON OPERATING COMPANY LHD TEST OF THE MUDDY SANDSTONE UNIT #30-6 OIL
WELLS

DAI has acquired oil production records from the State of Colorado Department of
Oil and Gas for the Wellington Operating Company Muddy Sandstone Unit #30-6 oil
wells (3 wells in the unit). A copy of the production records is included in
Appendix 2 of this report. The production records were used by DAI to construct
an oil production curve for this unit. The production curve is included in
Appendix 2. An Affidavit sworn by Mr. Bradley A. Pomeroy, President, Managing
Operations Officer, Wellington Operating Company, has been acquired by DAI. The
affidavit swears the following:

                                       5

<PAGE>

         That he had engaged Landers Horizontal Drill to jet channels and
         stimulate two (2) wells, the Unit 19-10 and the Unit 40-2, on or about
         June, 1999. These wells were completed as oil wells in the Wellington
         Muddy Sandstone Unit, Larimer County, Colorado, over 20 years. Both
         have been producing continuously since their completion from a depth of
         approximately 4,700 feet. The wells had been producing up to
         approximately 5 barrels of oil per day prior to Lander's work. Channels
         could not be emplaced in the Unit 19-10, probably due to deviation at
         the Muddy Formation of at least 10o. Eight channels were cut, at two
         different depths, in the Muddy Formation in the Unit 40-2 in one day.
         After the stimulation the well was swabbed for a day and a half.
         Results of the swab runs indicated that oil, gas, and water production
         had increased significantly. As all producing wells on the south end of
         the Wellington Unit are not individually gauged and are gathered
         together, specific per well production dated is not collected; however,
         field production data indicated that the laterals jetted into the Unit
         40-2 well had been successful.

         That he had engaged Advanced Petroleum Enhancement, Inc. (Landers
         Horizontal Drill) to mill holes in casing, jet channels and stimulate
         the Meyer #3 well on or about June 2000. This well was completed as an
         oil well in the Fort Collins Oil Field, Larimer, County, Colorado over
         20 years ago. The well has been producing intermittently since its
         completion in the Niobrara Formation (chalk) at a depth of about 3,800
         feet. Historic data indicated that this well, when pumping, made less
         than one barrel of oil per day. Eight channels were cut at two
         different depths, in the Niobrara Fm. in the Meyer #3 well in one day.
         An immediate increase in gas from the bore hole was noticed. The well
         was swabbed for one day and was returned to production. The first day
         after APE jetted channels, the Meyer #3 well made 40 barrels of oil.
         The first week saw production of 225 barrels of oil. Although a rapid
         decline in production occurred and the well eventually returned to
         pre-jetting rates, the channel jetting procedure was successful. The
         fractures in the Niobrara chalks, which feed oil to the well bore, tend
         to close quickly if not located in an extensional structural setting.

The production curve for this well (Appendix 2) supports the production
increases as stated in the Affidavit. A copy of this Affidavit is included in
Appendix 3.

DRY BONES PRODUCTION LHD TEST OF THE GAM #1 AND #2 OIL WELLS

An Affidavit sworn by Mr. Clarence J. Ballowe, Owner and Partner, Dry Bones
Production, has

                                       6

<PAGE>

been acquired by DAI. The affidavit swears the following:

         That he engaged Landers Horizontal Drill to recomplete and stimulate
         two (2) oil wells, the Gam #1 and Gam #2, on or about January 2002.
         These wells were spudded circa 1960 and are producing in the Annona
         Chalk Formation (fractured limestone) and located in the Caddo Pine
         Island Oil Field, northwest Louisiana at a depth of approximately 1,500
         feet. The wells had been producing up to approximately 1/10 barrel of
         oil per day or less. After laterals were drilled by Landers Horizontal
         Drill, oil production increased approximately ten (10) fold the
         previous production of said wells. The affiant further declared that to
         his knowledge, information and belief, the increase in production has
         essentially remained the same.

A copy of this Affidavit is included in Appendix 3. It appears that the LHD
laterals improved the productivity of these 2 wells by a factor of 10. It seems
possible that some form of follow-up well treatment such as a CO(2) frac or
diesel fuel frac in conjunction with installation of the laterals may have
further enhanced oil productivity in this well.

BURLINGTON RESOURCES LHD TEST OF THE UTE 32-11 #402 COAL BED METHANE GAS WELL

DAI has acquired oil production records from the State of Colorado Department of
Oil and Gas for the Burlington Resources Ute 32-11 #402 gas well. A copy of the
production records is included in Appendix 1 of this report. The production
records were used by DAI to construct an oil production curve for this unit. The
production curve is included in Appendix 2.

Coal bed gas production from the Ute Indian federal lease is from the Fruitland
Coal within the Ignacio Blanco Field. Details of the geology, production depths,
and well treatment by the LHD process have not been obtained at the time this
report was prepared. However, records indicate that

                                       7

<PAGE>

the Ute 32-11 #402 coal bed methane gas well (API No. 05-067-07622 was tested
using the LHD laterals in March 1998. First gas production from the well was in
1990.

Production records for this well indicate that the LHD was not successful in
increasing coal bed methane gas production. Although production records for the
period prior to January 1999 were not obtained for this well (the period
includes the installation date for the LHD laterals installation), a review of
the gas production curve does not reflect any noticeable increase in gas
productivity following installation of the laterals.

KLM EXPLORATION CO., INC. LHD TEST OF THE WAGNER LEASE #1 OIL WELL

DAI has acquired oil production records from the State of Kansas Geological
Survey, Department of Oil and Gas for the KLM Exploration Company, Inc. Wagner
No. 1 oil well. A copy of the production records is included in Appendix 2 of
this report. The production records were used by DAI to construct an oil
production curve for this well. The production curve is included in Appendix 2.

Production from the Wagner lease is from the McLouth Sandstone within the
McLouth Oil Field. Details of the geology, production depths, and well treatment
by the LHD process have not been obtained at the time this report was prepared.
However, records indicate that the Wagner #1 well (API No. 15-087-20415 was
tested using the LHD laterals in September 2000. First oil production from the
field was in 1988.

                                       8
<PAGE>

The oil production curve for this well illustrates the results of the LHD
horizontal jetting test. Oil production was increased from approximately 150
barrels per month in July 2000 to more than 1000 barrels in August 2000. While
production rapidly diminished during the next 2-3 months, oil production
remained above 300 barrels per month for the next 8-12 months. As of June 2002
production records, the well performance appeared to have stabilized at
approximately 250 barrels per month until at least early 2003. No records were
available after this period at the time of this report. The LHD jetting test
appears to have been successful for this well.

MOON-HINES-TIGRETT OPERATING CO. LHD TEST OF THE BETSY-DIXON 23-6 #1 GAS WELL

DAI has acquired gas production records for the Moon-Hines-Tigrett Operating
Company Betsy-Dixon 23-6 #1 gas well from the Alabama State Oil and Gas Board.
The LHD laterals were drilled into the Betsy-Dixon 23-6 #1 gas well in August
2002. The well is located in the South Kennedy Field, Lamar County, Alabama.
Initial production from this well was recorded as April 1999. Prior to the LHD
laterals, gas production from this well had declined to approximately 1,750 MCF
per month. Gas is produced from perforations in four Benton sand zones ranging
over a depth interval of 2,303-2,964 feet.

As can be seen in the production curve for this well (Appendix 2), upon
installation of an unknown number of LHD laterals and unknown followup well
treatment, the well responded with a gas production increase to approximately
8,244 Mcf in September 2002. Gas production declined to

                                       9
<PAGE>

4,149 Mcf by May 2003, the most recent available month with production records
as of the time this report was prepared.

The response performance in gas production for this well is significant. The LHD
jetting test appears to have been successful for this well.

MOON-HINES-TIGRETT OPERATING CO. LHD TEST OF THE LANGSTON 31-7 #1 GAS WELL

DAI has acquired gas production records for the Moon-Hines-Tigrett Operating
Company Langston 31-7 gas well from the Alabama State Oil and Gas Board. The LHD
laterals were drilled into the Langston 31-7 #1 gas well in December 2001. The
well is located in the Bluff Field, Fayette County, Alabama. Initial production
from this well was recorded as September 1980. Prior to the LHD laterals, gas
production from this well had declined to approximately 2,495 MCF per month. Gas
is produced from perforations in two Gilmer sand zones ranging over a depth
interval of 1,891-2,056 feet.

As can be seen in the production curve for this well (Appendix 2), upon
installation of an unknown number of LHD laterals and unknown followup well
treatment, the well responded with a gas production increase to approximately
13,389 Mcf in March 1999. Gas production declined to 3,931 Mcf by May 2003, the
most recent available month with production records as of the time this report
was prepared. Increased gas production from the LHD laterals resulted in a
significant increase in gas reserve value.

                                       10
<PAGE>

The response performance in gas production for this well is significant. The LHD
jetting test appears to have been successful for this well.

METRO ENERGY GROUP, INC. LHD TEST OF THE GLASSELL F-6 OIL WELL

On September 26, 2003, the author was invited to observe the drilling of LHD
laterals in the Metro Energy Group, Inc. Glassell F-6 oil well. Those in
attendance included Don Boyd, consulting petroleum engineer, John Levitts,
President of Metro Energy Group, Inc., Rick Holcomb, Partner in Metro Energy
Group, Inc., and Carl Landers of Landers Horizontal Drill, Inc.

The test well is located in the Caddo Pine Island Field of northwest Louisiana
near Oil City, Louisiana. The well was originally drilled several years ago in
the old field to a depth of approximately 1,456 feet in the Annona (Chalk)
Formation. Prior to drilling the laterals, the well reportedly had been
producing less than 1 barrel of oil per day with some water and trace of gas
from the Annona Chalk.

The author observed the drilling of the first LHD lateral at an indicated depth
of 1,422 feet and a horizontal jetting of the lateral to an indicated distance
of 191 feet. The lateral was completed in approximately 1 hour. An additional 3
laterals were drilled during the next day. The second, third, and fourth
laterals were drilled at a depth of 1,456 feet in the Annona Chalk and jetted to
indicated horizontal distances of 173 feet, 248 feet, and 250 feet
(approximately). The well was not treated with any acid.

                                       11
<PAGE>

On October 3, 2003, the author learned that the well had undergone daily casing
swabbing. Initial production estimates were reported at 37-40 barrels per day of
total fluid with approximately 27-29 barrels of oil per day. Gas was not
measured by estimated at 10,000-12,000 cubic feet per day. The static fluid
level in the well prior to LHD installation of the laterals was measured at 960
feet. After installation and swabbing, the fluid level was measured at a depth
of 412 feet. The operator has installed a Permaswab unit on the well (automatic
swabbing unit). The well is pulling a casing swab every 90 minutes. Field
reports indicate the well is yielding in the range of 10-20 barrels of oil per
day.

The results of this test are preliminary at the time this report was prepared.
However, initial results indicate a favorable well response to installation of
the laterals. The operator stated that LHD laterals will be installed in
additional wells if favorable results from the test well continue to be
demonstrated.

3.2      PREVIOUSLY SELECTED LHD SERVICE PROJECTS

RESULTS OF THE CITIZENS GAS & COKE UTILITY LHD TEST PROGRAM

A five-well test program of the Landers Horizontal Drill technology was
completed by Citizens Gas & Coke Utility (Citizens) in 1997 in the Illinois
Basin. The results of the test program were reported by Citizens as encouraging
but not definitive because too few wells were tested. The complete test results
report, Landers Horizontal Drill Test Program, January 1998, was provided to DAI
by LHDI and is included in Appendix 4 of the August 2000 DAI report. Citizens
stated in

                                       12
<PAGE>

the report that the LHD technology has proven the ability to 1) successfully
mill 3/4" holes in production casing; 2) blast horizontal channels of up to 410
feet in length through these holes using a waterjet cutting nozzle; 3) to cut
sandstone, limestone, dolomitic-limestone, and shale formations; and 4) to
economically enhance oil production in some wells. Of the five test wells, one
of the wells had an economic production increase, three wells had uneconomic
production increases, and one shale well had horizontal channels successfully
placed but was not production tested. Citizens noted that it should be noted
that two of the three uneconomic LHD test wells were "long shots". These two
wells were highly uneconomic as vertical drilled wells and are not believed by
Citizens as representative of the potential market for LHD technology. Table 1
from the original August 21, 2000 DAI report summarizes the results of the LHD
test program.

                                       13
<PAGE>

                                     TABLE 1
                        SUMMARY OF OIL WELL TEST PROGRAMS
                       LANDERS HORIZONTAL DRILL TECHNOLOGY
                           CITIZENS GAS & COKE UTILITY
                              ILLINOIS BASIN FIELDS

<TABLE>
<CAPTION>
       WELL NAME           PERRY KING #141    PLUMMER "B" #1    SQUIRES ET AL #1          REAGAN #1              ELLETT #4
- -----------------------------------------------------------------------------------------------------------------------------------
<S>                       <C>                <C>               <C>                 <C>                      <C>
       FIELD NAME              Lawrence          Plummer            Plummer                Plummer                Plummer
- -----------------------------------------------------------------------------------------------------------------------------------
        LOCATION           Lawrence Co., IL   Greene Co., IN    Greene Co., IN         Greene Co., IN          Greene Co., IN
- -----------------------------------------------------------------------------------------------------------------------------------
                            Bridgeport A"         Salem            Geneva                New Albany                 Salem
   FORMATION/LITHOLOGY       sandstone          limestone         dolomite                  shale                 limestone
- -----------------------------------------------------------------------------------------------------------------------------------
     LATERAL DEPTH (FT        934 & 938         718 & 719       1,583 & 1,585              1,440                    741
- -----------------------------------------------------------------------------------------------------------------------------------
  DATE LATERALS DRILLED         9/97              9/97              9-10/97                 1997                   10/97
- -----------------------------------------------------------------------------------------------------------------------------------
     NO. OF LATERALS         4 (2 zones)       6 (2 zones)       9 (2 zones)                 4                       5
- -----------------------------------------------------------------------------------------------------------------------------------
  LENGTH OF LATERALS (FT)        300              51-226           100-297                50-410                  60-300
- -----------------------------------------------------------------------------------------------------------------------------------
  DAILY OIL PRODUCTION
    PRIOR TO *LHD
       (BO/BW)                 2-3/18            4.5/300            6/54                 Not Tested              < 1/180
- -----------------------------------------------------------------------------------------------------------------------------------
  DAILY OIL PRODUCTION
  AFTER LHD (BO/BW)            5/120            23.5/938           9.5/59                Not Tested              < 1/180
- -----------------------------------------------------------------------------------------------------------------------------------
     ECONOMIC WELL
       (YES/NO)                  No               Yes                No                 Not determined              No
- -----------------------------------------------------------------------------------------------------------------------------------
                                             Well
                                             enhancement       Laterals drilled    Laterals drilled only    Well initially drilled
                          Heavy oil could    was an            with water rather   to determine if the LHD  structurally low;
                          not be             economic &        than acid;          process could cut        suffered low reservoir
        COMMENTS          economically       technologic       improper acidizing  shale; a technologic     quality; could not be
                          produced           success           job                 success.                 improved.
===================================================================================================================================
</TABLE>

                                       14
<PAGE>


RESULTS OF THE SABA PETROLEUM, INC. LHD TEST PROGRAM

A two-well test program of the Landers Horizontal Drill technology was completed
by Saba Petroleum, Inc. (Saba) as reported to LHDI in April 1997 in the Richland
Field, Orange County, California. The LHD test program by Saba reportedly
resulted in a positive change in oil production. In a letter to LHD, dated April
23, 1997, a brief account of the test program was provided. A total of twelve
300 foot horizontal laterals through seven inch diameter slotted casing were
made in two oil producing wells at three levels in 4,000-4,700 foot depth range.
The targeted reservoir was identified as the Kraemer Zone, Miocene in age. The
reservoir consisted of partially consolidated sand/shale. Results indicated that
the laterals yielded gassier, lighter gravity oil and an increase fluid level
column in the well bore. Saba found the technology to have merit and indicated
an interest in using the LHD technology in the future. The Saba letter was
provided to DAI by LHDI and is included in Appendix 3 of the August 21, 2000 DAI
report.

RESULTS OF THE VOGLER DRILLING COMPANY LHD TEST PROGRAM

A single well test program of the Landers Horizontal Drill technology was
completed by Vogler Drilling Company (Vogler) in October 1999 in the Illinois
Basin of Muhlenberg County, Kentucky. In a letter to Mr. Landers, dated November
1, 1999, a brief account of the test program was provided. A total of ten
laterals were drilled in the Bethel sandstone of the Corley No. 4 well at a
depth of 1,545 feet. The laterals reportedly extended to a length of 300 feet.
The laterals were drilled with a relative angular horizontal spacing of 36
degrees. The results of the test program of the formerly abandoned well were
reported by Vogler as encouraging. After a 9,400 acid fracture job on the zone,
the well had an initial production rate of 14 BOPD. At the time of abandonment,
the well was producing at 1 BOPD. Vogler stated that in their opinion the well
could not have been successfully fractured without the laterals. The Vogler
letter is included in Appendix 3 of the August 21, 2000 DAI report and was
provided by LHDI to DAI.

                                       15
<PAGE>

As an update to this discussion, DAI has obtained a summary of oil production
from the Corley #4 well since the well was serviced by the LHD test program. An
oil production summary for this well was obtained from the Kentucky Department
of Mines and Minerals. The production information was used to construct an oil
production curve and is included in Appendix 1 of this report. The information
was available for the reporting ending December 2000. The oil production curve
for this well is included in Appendix 2.

The records found for this well indicate that the well was treated by the
Landers horizontal drill in October 1999. Production data illustrate the sharp
increase in oil production for a period of approximately 3-4 months followed by
sustained monthly production of about 3 barrels of oil per day. This result
indicates that the laterals drilled into the Bethel sand successfully increased
production on a more sustained basis.

RESULTS OF THE DC & B Oil Company and Virsal Oil Company LHD Test Program

A two-well test program in the Hospah Field near Grants, New Mexico of the
Landers Horizontal Drill technology was completed by DC & B Oil Company (DC &
B). Additionally, a single gas well test program in Kern County, California of
the Landers Horizontal Drill technology was completed by Virsal Oil Company
(Virsal). An overview of the programs was reported to LHDI in a memo to Mr. Carl
Landers from the W.D. Newsom Consulting Company, dated June 4, 1997. A copy of
this memo is included in Appendix 3 of the August 21, 2000 DAI report.

                                       16
<PAGE>

DC & B Oil Company LHD Test Program

According to the memo, two low production oil wells were intentionally selected
by the operator to test the LHD technology. Well No. 1 had been shut in as
uneconomic at 1/2 BOPD with no water before recompleted with horizontal
laterals. A total of four laterals were drilled to a total length of 100 feet at
an unspecified depth of less than 1,500 feet. Upon completion, the well
initially produced 35 BOPD and gradually leveled off to a production rate of 12
BOPD after 8 months. Well No. 2 had been producing at a rate of 3 BOPD and 150
BWPD. In September 1996 a total of 3 horizontal laterals were drilled to a total
length of 300 feet. Upon re-completion, the well reportedly had an initial
production of 15 BOPD and leveled off to a production rate of 13 BOPD and 158
BWPD after 8 months of production. This reservoir was indicated to be an active
water drive. The operator stated in the memo that the LHD technology produced
very economic results with payouts in 45-60 days. The operator expressed an
interest using the technology again.

VIRSAL OIL COMPANY LHD TEST PROGRAM

A single gas well previously completed in the Etchegoin formation reservoir and
undergone damage from acidization. This well was producing gas at 65-70 MCFPD
and 2 BWPD at a depth of 3,300-3,500 prior to the LHD test program. A total of
three laterals were drilled in May 1997 at lengths of 10-125 feet in a 6 foot
pay zone at depth of 3,350 feet. The laterals were drilled using fresh water
with swelling clay inhibitors. Results indicate that the horizontal laterals
drilled in the target pay zone produced less gas than expected. The operator
suggested that these results indicate that the remaining gas reserves for this
well were perhaps contained in the thinner (less permeable) gas sand stringers
and not the 6 foot target pay zone. This factor indicates that the reserves in
the thinner zones were previously producing the gas and were not impacted by the
horizontal laterals.

                                       17
<PAGE>

The well when put back into production resumed production at about 70 MCFPD and
2 BWPD. The operator stated that the LHD performance was good.

ENERGY, INC. LHD TEST OF THE STONE #1 OIL WELL

On July 27, 2000, Energy, Inc. of Marion, Indiana contracted with Landers
Horizontal Drill Technology, Inc. to drill at total of seven horizontal laterals
in the Stone No. 1 oil well located in the Rich Valley Field, Wabash County,
Indiana. As well site geologist for Energy, Inc., the author personally observed
the lateral drilling process. The laterals were drilled to a maximum length of
300 feet in an open hole at a depth of 865 feet within the Trenton Formation
(Ordovician age). The oil production zone in the well was a dolomite. Prior to
drilling the horizontal laterals the Stone No. 1 well was producing
approximately 1 BOPD with very little water.

After gamma ray-neutron logging of the well, the laterals were observed to be
drilled with very little effort by APEI (LHDI service operator) once the proper
drilling pressures were determined largely by trial and error. Each of the
laterals was jetted using a weak acetic acid and biocide mixture pumped under
4,000-6,000 psi pressure through the jetting nozzle. The formation penetration
rate of the lateral jetting nozzle was observed to be more than 50 feet per
minute during jetting of the horizontal laterals. The performance of the two-man
service crew was very good. The next day, the well was swabbed and found to have
been damaged by a sludge consisting of abundant iron oxides, pyrite, and
degraded oil. These materials are probably the result of biologic degradation
and sulfur reducing bacteria over the past 100 years from bacterial
contamination introduced through past drilling and completion practices.

The well remained shut-in until August 12 at which time a biocide mixture and
surfactant was

                                       18
<PAGE>

pumped into the well bore by displacement of formation water at a pressure of
approximately 500 psi. This process attempted to clean out the laterals and well
bore as much as possible. Subsequent swabbing and bailing yielded a significant
amount of drill cuttings and fines. However, the well appeared to yield no more
than 1-2 BOPD will virtually no water.

On August 21, the well was acidized using 525 gallons of 15% HCL acid with clay
and iron inhibitors with a surfactant. The well acidizing pressure was 400 psi.
The well was then swabbed to return the acidizing load. Continued swabbing
yielded 10-12 BO with very water. Preliminary results indicated a favorable
increase in oil production for this well.

As an update to the DAI report of August 21, 2000, the Stone #1 well has not
been found to have increased oil production. While the company believes that the
installation of the laterals was successful, the outcome of the laterals and
followup treatment was unsuccessful.

4.0      MARKET VIABILITY OF THE LHD TECHNOLOGY

The market viability of the LHD technology in the petroleum service industry was
addressed by DAI in the August 2000 report based on the key factors of service
pricing criteria and industry operator perception of the service offered by the
LHD technology. Since the initial report was written, the key factors are still
of major importance in marketing the LHD technology.

An evaluation of the market viability of the LHD technology should still include
1) an assessment of the demonstrated capability of the technology to reliably
attain marketplace driven goals; and 2) an assessment of economic feasibility of
the technology. The LHD technology must still meet both

                                       19
<PAGE>

primary factors to be viable in the marketplace.

The Landers Horizontal Drill technology was conceived, developed, and patented
during a period of time when the U.S. petroleum industry had been decimated by a
decade of depressed oil and gas market prices. This factor, along with
increasing governmental regulatory influences, has combined to squeeze the
profitability out of traditional independent oil and gas producers in the U.S.

MARKET POTENTIAL

Most U.S. oil producers are privately owned companies tending to be much smaller
than publicly owned oil and gas producers. For example, in 1992, when the major
oil companies produced a per company average of 345,000 barrels per day, the
other publicly-traded oil and gas companies produced an average of 10,000
barrels per day, and the remaining oil and gas companies produced an average of
only 300 barrels per day. These small private producers are quite numerous
accounting for about 7,400 of the nearly 8,000 companies reporting oil and/or
gas production in the U.S. in 1992.

The LHD technology has been demonstrated to significantly enhance oil and gas
production to depths of approximately 5,800 feet. At the same time, the LHD
technology has shown repeatedly it can produce a cost effective approach to turn
many marginal, shut-in wells, into profitable producers.

The service product is unique in that it substantially improves production
similarly to conventional horizontal drilling, but a fraction of the cost and in
significantly less time. At the time the August

                                       20
<PAGE>

2000 DAI report was completed, Mr. Landers believed that the LHD technology was
positioned to succeed. The author agrees with his point of view based on what
I've seen in this updated assessment. I believe that the LHD technology has been
successfully demonstrated to have market viability through field testing by many
small petroleum independents. I also believe that the LHD technology has proven
to be potentially very profitable and can be done so on a large scale basis
through well managed growth.

5.0 SUMMARY OPINION

5.1      CONCLUSIONS

In conclusion, it is the author's professional opinion that the patented LHD
technology has been demonstrated to be technically sound. The technology will
not always produce favorable results of increased oil and gas production due to
subsurface factors beyond the control of the technology. If the reservoirs have
been severely depleted or negatively impacted in some manner, the technology
will not benefit the operator. For the most part, the technology should perform
favorably in most oil and gas wells that have potential for improved reservoir
characteristics. In conjunction with well planned and executed reservoir
enhancement treatments, the LHD technology has been successfully demonstrated to
enhance oil and gas production in wells that otherwise were under performing.
While there is a need for refinement of the technology through continued
research and development, it is my opinion that the LHD technology has
substantial value as a relatively low cost means of enhancing oil and gas
production in the U.S. and the oil producing nations of the world.

                                       21
<PAGE>

This project has resulted in an updated evaluation of the LHD technology market
viability and concludes that: 1) the LHD technology can reliably attain the
marketplace driven goal of enhanced oil and gas productivity; and 2) the
marketplace will respond to the LHD technology if it is reasonably priced.

5.2      RECOMMENDATIONS

Based on the author's consideration of information reviewed concerning the LHD
technology and market viability, the following recommendations are respectively
submitted:

         -        It is recommended that routine information on every oil and
                  gas well serviced by the LHD technology be recorded in a file
                  format suitable for future reference and evaluation; this will
                  be especially important as the technology grows in usage by
                  the industry; information management will become vital.

         -        As a service sector product, the LHD technology should be
                  priced to offer benefits to the small independent operator as
                  well as the larger independents and major oil companies;
                  pricing will drive market growth, especially for the next 2-3
                  years with the smaller independents; as the service continues
                  to demonstrate reliability and positive results, the larger
                  independents and majors will become more likely to utilize the
                  technology; pricing will become secondary as compared to
                  increased productivity.

         -        It is recommended that a strong marketing program be developed
                  to approach the larger independents and major oil companies;
                  while slow to accept new

                                       22
<PAGE>

                  technologies in the petroleum industry, the larger firms will
                  eventually accept the LHD technology once demonstrated by a
                  few of the more well known firms.

         -        It is the author's opinion that the greatest strength
                  represented by the LHD technology is to use it to create oil
                  and gas production deals; It is recommended that growth
                  emphasis be placed more on use of the technology to acquire
                  and participate in oil and gas development projects that lend
                  themselves to this technology. The real value of this
                  technology is using it to create future opportunities.

                                      23

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.11
<SEQUENCE>14
<FILENAME>h10836aexv10w11.txt
<DESCRIPTION>PLACEMENT AGENCY AGREEMENT
<TEXT>
<PAGE>
                                                                   EXHIBIT 10.11


                           PLACEMENT AGENCY AGREEMENT


         This Placement Agency Agreement (this "Agreement") is made and entered
into as of August 26, 2003 (the "Effective Date"), by and between Verdisys,
Inc., a California corporation (the "Company"), and Stonegate Securities, Inc.,
a Texas corporation ("Stonegate").

         WHEREAS, the Company desires to retain Stonegate as its non-exclusive
placement agent, and Stonegate is willing to act in such capacity, in each case
subject to the terms and conditions of this Agreement.

         NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the Company and Stonegate (each a "Party" and
collectively, the "Parties") hereby agree as follows:

1.       RETENTION OF STONEGATE; SCOPE OF SERVICES.

         (a)   Subject to the terms and conditions set forth herein, the Company
               hereby retains Stonegate to act as the non-exclusive placement
               agent to the Company during the Contract Period (as defined in
               Section 2 below), and Stonegate hereby agrees to be so retained.

         (b)   As the non-exclusive placement agent to the Company, Stonegate
               will have the non-exclusive right during the Contract Period to
               identify for the Company prospective purchasers (collectively,
               the "Purchasers" and each individually, a "Purchaser") in one or
               more placements (each , a "Placement", and collectively, the
               "Placements") of debt and/or equity securities to be issued by
               the Company, the type and dollar amount being as mutually agreed
               to by the Parties (the "Securities"). The Company and Stonegate
               understand that the Company intends to undertake an initial
               "bridge" Placement of up to $3 million of Securities (the "Bridge
               Placement"), which Placement shall only qualify as such if it is
               completed on or prior to September 30, 2003. Thereafter, the
               Company intends to undertake a second Placement. All provisions
               of this Agreement applicable to a Placement shall also be
               applicable to the Bridge Placement, unless otherwise provided
               herein.

         (c)   Terms of the Placements shall be as set forth in subscription
               documents, including any stock purchase or subscription
               agreement, escrow agreement, registration rights agreement,
               warrant agreement and/or other documents to be executed and
               delivered in connection with the Placement (collectively, the
               "Subscription Documents"). The Placements are intended to be
               exempt from the registration requirements of the Securities Act
               of 1933, as amended (the "Securities Act"), pursuant to
               Regulation D ("Regulation D") of the rules and regulations of the
               Securities and Exchange Commission (the "SEC") promulgated under
               the Securities Act.

         (d)   Stonegate will act on a best efforts basis and will have no
               obligation to purchase any of the Securities offered in the
               Placements. During the Contract Period, Stonegate shall have the
               non-exclusive right to arrange for all sales of Securities in the
               Placements, including without limitation the non-exclusive right
               to identify potential buyers for the Securities. All sales of
               Securities in the Placements shall be subject to


<PAGE>

               the approval of the Company, which approval may be withheld in
               the Company's sole discretion.

2.       CONTRACT PERIOD AND TERMINATION.

         (a)   Stonegate shall act as the Company's non-exclusive placement
               agent under this Agreement for a period commencing on the
               Effective Date, and continuing until terminated by either Party
               upon 30 days notice to the other Party (the "Contract Period").

         (b)   Upon termination, neither party will have any further obligation
               under this Agreement, except as provided in Sections 5, 6, 7, 8,
               9 and 10 hereof.

3.       REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

         The representations and warranties of the Company made to the
         Purchasers as set forth in the Subscription Documents are hereby
         incorporated by reference as of the date of consummation of the sale of
         the Securities (the "Closing") and all such representations and
         warranties are hereby deemed made by the Company directly to Stonegate
         as though set forth in full herein.

4.       COVENANTS OF THE COMPANY.

         The Company covenants and agrees as follows:

         (a)   Neither the Company nor any affiliate of the Company (as defined
               in Rule 501(b) of Regulation D) will sell, offer for sale or
               solicit offers to buy or otherwise negotiate in respect of any
               security (as defined in the Securities Act) of the Company which
               will be integrated with the sale of the Securities in a manner
               which would require the registration under the Securities Act of
               the Securities.

         (b)   Any and all filings and documents required to be filed in
               connection with or as a result of the Placement pursuant to
               federal and state securities laws are the responsibility of the
               Company and will be filed by the Company.

         (c)   Any press release to be issued by the Company announcing or
               referring to the Placement shall be subject to the prior review
               of Stonegate, and each such press release shall, at the request
               of Stonegate, identify Stonegate as the placement agent.
               Stonegate shall be permitted to publish a tombstone or similar
               advertisement upon completion of the Placement identifying itself
               as the Company's placement agent with respect thereto. This
               Agreement shall not be filed publicly by the Company without the
               prior written consent of Stonegate, unless required by applicable
               law or regulation.

5.       FURNISHING OF COMPANY INFORMATION; CONFIDENTIALITY.

         (a)   In connection with Stonegate's activities hereunder on the
               Company's behalf, the Company shall furnish Stonegate with all
               reasonable information concerning the Company and its operations
               that Stonegate deems necessary or appropriate (the


                                       2
<PAGE>

               "Company Information") and shall provide Stonegate with
               reasonable access to the Company's books, records, officers,
               directors, employees, accountants and counsel. The Company
               acknowledges and agrees that, in rendering its services
               hereunder, Stonegate will be using and relying upon the Company
               Information without independent verification thereof or
               independent appraisal of any of the Company's assets and may, in
               its sole discretion, use additional information contained in
               public reports or other information furnished by the Company or
               third parties.

         (b)   Stonegate agrees that the Company Information will be used solely
               for the purpose of performing its services hereunder. Subject to
               the limitations set forth in subsection (c) below, Stonegate will
               keep the Company Information provided hereunder confidential and
               will not disclose such Company Information or any portion
               thereof, except (i) to a third party contacted by Stonegate on
               behalf of, and with the prior approval of, the Company pursuant
               hereto who has agreed to be bound by a confidentiality agreement
               satisfactory in form and substance to the Company, or (ii) to any
               other person for which the Company's consent to disclose such
               Company Information has been obtained.

         (c)   Stonegate's confidentiality obligations under this Agreement
               shall not apply to any portion of the Company Information which
               (i) at the time of disclosure to Stonegate or thereafter is
               generally available to and known by the public (other than as a
               result of a disclosure directly or indirectly by Stonegate in
               violation of this Agreement); (ii) was available to Stonegate on
               a non-confidential basis from a source other than the Company,
               provided that such source is not and was not bound by a
               confidentiality agreement with the Company; (iii) has been
               independently acquired or developed by Stonegate without
               violating any of its obligations under this Agreement; or (iv)
               the disclosure of which is legally compelled (whether by
               deposition, interrogatory, request for documents, subpoena, civil
               or administrative investigative demand or other similar process).
               In the event that Stonegate becomes legally compelled to disclose
               any of the Company Information, Stonegate shall provide the
               Company with prompt prior written notice of such requirement so
               that the Company may seek a protective order or other appropriate
               remedy and/or waive compliance with the terms of this Agreement.

         (d)   The obligations of the Parties under this Section 5 shall survive
               the termination of this Agreement for 12 months.

6.       FEES AND EXPENSES.

         (a)   As compensation for services rendered by Stonegate in connection
               with the Bridge Placement, the Company agrees to pay Stonegate a
               fee of five percent (5%) of the gross proceeds from the sale of
               Securities sold in the Bridge Placement to any Stonegate Contacts
               (as defined in Section 8 below) (the "Bridge Agency Fee"). The
               Bridge Agency Fee shall be paid immediately upon the closing of
               each sale of Securities by the Company in the Bridge Placement.

         (b)   As compensation for services rendered by Stonegate in connection
               with a Placement (excluding the Bridge Placement), the Company
               agrees to pay Stonegate a fee of


                                       3
<PAGE>

               eight percent (8%) of the gross proceeds from the sale of
               Securities sold in the Placement to Stonegate Contacts in the
               event total gross proceeds are less than $5 million, a fee of
               seven percent (7%) of the gross proceeds from the sale of
               Securities sold in the Placement to Stonegate Contacts if total
               gross proceeds are between $5 million and $10 million, and a fee
               of six percent (6%) of the gross proceeds from the sale of
               Securities sold in the Placement to Stonegate Contacts in the
               event total gross proceeds are in excess of $10 million (the
               "Agency Fee"). The Agency Fee shall be paid immediately upon the
               closing of each sale of Securities by the Company

         (c)   In order to compensate Stonegate for its initial diligence
               efforts, upon execution of this Agreement by the Parties, the
               Company shall issue and deliver to Stonegate a certificate
               evidencing 20,000 shares of the Company's common stock, no par
               value (the "Shares"). The Shares will not be registered under the
               Securities Act; provided, however, in the event Purchasers in the
               Placements are granted registration rights, the holders of the
               Shares shall automatically be granted identical registration
               rights.

         (d)   In addition, the Company shall also promptly reimburse Stonegate
               for all reasonable out-of-pocket expenses incurred by Stonegate
               and its directors, officers and employees in connection with the
               performance of Stonegate's services under this Agreement. For
               these purposes, "out-of-pocket expenses" shall include, but not
               be limited to, attorney's fees and costs, long distance
               telephone, facsimile, courier, mail, supplies, travel and similar
               expenses. Except for bills for long distance telephone,
               facsimile, federal express, courier, mail and supplies, Stonegate
               will not incur any expenses without the prior consent of the
               Company; and the Parties shall attempt to have the Company direct
               billed as often as possible for such expenses.

         (e)   Upon closing of the Bridge Placement, the Company agrees to issue
               to Stonegate a Securities Purchase Warrant (the "Bridge
               Representative's Warrant") entitling the holder(s) thereof to
               purchase an amount of Securities equal to five percent (5%) of
               the total number of Securities sold in the Bridge Placement to
               Stonegate Contacts for a period of five (5) years at an exercise
               price per share equal to the price at which the Securities are
               sold to Purchasers. The Representative's Warrant shall otherwise
               be substantially in the form of Exhibit A attached hereto.

         (f)   Upon closing of any Placement (excluding the Bridge Placement),
               the Company agrees to issue to Stonegate an additional
               Representative's Warrant entitling the holder(s) thereof to
               purchase an amount of Securities equal to ten percent (10%) of
               the total number of Securities sold in any such Placement to
               Stonegate Contacts for a period of five (5) years at an exercise
               price per share equal to the price at which the Securities are
               sold to Purchasers.

         (g)   The obligations of the Parties under this Section 6 shall survive
               the termination of this Agreement for any reason.

7.       INDEMNIFICATION.

         (a)   The Company agrees to indemnify and hold Stonegate harmless from
               and against any and all losses, claims, damages or liabilities
               (or actions, including securityholder


                                       4
<PAGE>

               actions, in respect thereof) related to or arising out of
               Stonegate's engagement hereunder or its role in connection
               herewith, and will reimburse Stonegate for all reasonable
               expenses (including reasonable costs, expenses, awards and
               counsel fees and/or judgments) as they are incurred by Stonegate
               in connection with investigating, preparing for or defending any
               such action or claim, whether or not in connection with pending
               or threatened litigation in which Stonegate is a party. The
               Company will not, however, be responsible for any claims,
               liabilities, losses, damages or expenses which are finally
               judicially determined to have resulted primarily from the bad
               faith, gross negligence or willful misconduct of Stonegate. The
               Company also agrees that Stonegate shall not have any liability
               to the Company for or in connection with such engagement, except
               for any such liability for losses, claims, damages, liabilities
               or expenses incurred by the Company that result primarily from
               the bad faith, gross negligence or willful misconduct of
               Stonegate. In the event that the foregoing indemnity is
               unavailable (except by reason of the bad faith or gross
               negligence of Stonegate), then the Company shall contribute to
               amounts paid or payable by Stonegate in respect of its losses,
               claims, damages and liabilities in such proportion as
               appropriately reflects the relative benefits received by, and
               fault of, the Company and Stonegate in connection with the
               matters as to which such losses, claims, damages or liabilities
               relate, and other equitable considerations. The foregoing shall
               be in addition to any rights that Stonegate may have at common
               law or otherwise and shall extend upon the same terms to and
               inure to the benefit of any director, officer, employee, agent or
               controlling person of Stonegate. The Company hereby consents to
               personal jurisdiction, service and venue in any court in which
               any claim which is subject to this agreement is brought against
               Stonegate or any other person entitled to indemnification or
               contribution under this subsection (a).

         (b)   Stonegate agrees to indemnify and hold the Company harmless from
               and against any and all losses, claims, damages or liabilities
               (or actions, including securityholder actions, in respect
               thereof) which are finally judicially determined to have resulted
               primarily from the bad faith, gross negligence or willful
               misconduct of Stonegate, and will reimburse the Company for all
               reasonable expenses (including reasonable costs, expenses, awards
               and counsel fees and/or judgments) as they are incurred by the
               Company in connection with investigating, preparing for or
               defending any such action or claim, whether or not in connection
               with pending or threatened litigation in which the Company is a
               party. In the event that the foregoing indemnity is unavailable,
               then Stonegate shall contribute to amounts paid or payable by the
               Company in respect of its losses, claims, damages and liabilities
               in such proportion as appropriately reflects the relative
               benefits received by, and fault of, the Company and Stonegate in
               connection with the matters as to which such losses, claims,
               damages or liabilities relate, and other equitable
               considerations. The foregoing shall be in addition to any rights
               that the Company may have at common law or otherwise and shall
               extend upon the same terms to and inure to the benefit of any
               director, officer, employee, agent or controlling person of the
               Company. Stonegate hereby consents to personal jurisdiction,
               service and venue in any court in which any claim, which is
               subject to this agreement, is brought against the Company or any
               other person entitled to indemnification or contribution under
               this subsection (b).


                                       5
<PAGE>

         (c)   The obligations of the Parties under this Section 7 shall survive
               the termination of this Agreement.

8.       NON-CIRCUMVENTION.

         The Company hereby agrees that, for a period of one year from the end
         of the Contract Period or other termination of this Agreement, the
         Company will not enter into any agreement, transaction or arrangement
         with any of the institutions (including their agents, principals and
         affiliates and the accounts and funds which they manage or advise)
         which Stonegate has introduced, directly or indirectly, to the Company
         as prospective purchasers of the Securities in the Placements
         (collectively, the "Stonegate Contacts"), regardless of whether a
         transaction is consummated with such prospective purchasers, unless the
         Company notifies Stonegate in writing of the agreement, transaction or
         arrangement, and pays Stonegate a fee equal to the Agency Fee for
         securities of the Company sold to Stonegate Contacts.

9.       GOVERNING LAW.

         THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
         THE LAWS OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT TO ANY CONFLICT
         OF LAWS PROVISIONS THEREOF.

10.      ARBITRATION.

         Stonegate and the Company will attempt to settle any claim or
         controversy arising out of this Agreement through consultation and
         negotiation in good faith and a spirit of mutual cooperation. Any
         dispute which the parties cannot resolve may then be submitted by
         either party to binding arbitration in Dallas, Texas under the rules of
         the American Arbitration Association for resolution. Nothing in this
         paragraph will prevent either party from resorting to judicial
         proceedings if (a) good faith efforts to resolve the dispute under
         these procedures have been unsuccessful or (b) interim relief from a
         court is necessary to prevent serious and irreparable injury.

11.      NO WAIVER.

         The failure or neglect of any party hereto to insist, in any one or
         more instances, upon the strict performance of any of the terms or
         conditions of this Agreement, or waiver by any party of strict
         performance of any of the terms or conditions of this Agreement, shall
         not be construed as a waiver or relinquishment in the future of such
         term or condition, but the same shall continue in full force and
         effect.

12.      SUCCESSORS AND ASSIGNS.

         The benefits of this Agreement shall inure to the benefit of the
         Parties, their respective successors, assigns and representatives, and
         the obligations and liabilities assumed in this Agreement by the
         Parties shall be binding upon their respective successors and assigns.
         This Agreement may not be assigned by either Party without the express
         written consent of the other Party, which consent shall not be
         unreasonably withheld.


                                       6
<PAGE>

13.      NOTICES.

         All notices and other communications required or permitted to be given
         under this Agreement shall be in writing and shall be delivered
         personally or sent by certified mail, return receipt requested,
         recognized overnight delivery service, or facsimile as follows:

                   If to the Company:

                   Verdisys, Inc.
                   201 Tipperary Lane
                   Alameda, CA 94502
                   Facsimile: (408) 873-0550
                   Attention: Andrew Wilson, Chief Financial Officer


                   If to Stonegate:

                   Stonegate Securities, Inc.
                   5950 Sherry Lane, Suite 410
                   Dallas, Texas  75225
                   Facsimile: (214) 987-1981
                   Attention: Scott Griffith, President


         Either Party may change its address or facsimile number set forth above
         by giving the other Party notice of such change in accordance with the
         provisions of this Section 13. A notice shall be deemed given (a) if by
         personal delivery, on the date of such delivery, (b) if by certified
         mail, on the date shown on the applicable return receipt, (c) if by
         overnight delivery service, on the day after the date delivered to the
         service, or (d) if by facsimile, on the date of transmission.

14.      NATURE OF RELATIONSHIP.

         The Parties intend that Stonegate's relationship to the Company and the
         relationship of each director, officer, employee or agent of Stonegate
         to the Company shall be that of an independent contractor and not as an
         employee of the Company or an affiliate thereof. Nothing contained in
         this Agreement shall constitute or be construed to be or create a
         partnership or joint venture between Stonegate and the Company or their
         respective successors or assigns. Neither Stonegate nor any director,
         officer, employee or agent of Stonegate shall be considered to be an
         employee of the Company by virtue of the services provided hereunder.

15.      MISCELLANEOUS.

         Stonegate's obligations under this Agreement are subject to the
         following general conditions:

         (a)   All relevant terms, conditions, and circumstances relating to the
               Placement will be reasonably satisfactory to Stonegate and its
               counsel.


                                       7
<PAGE>

         (b)   Stonegate reserves the right to solicit the assistance of outside
               dealers ("Dealers") to assist in the offer and sale of the
               Placements; provided, however, that any such Dealers agree in
               writing to be bound by the terms of the Placement. It is
               understood that Stonegate, in its sole discretion, shall be
               entitled to pay over to any such Dealers any portion of the
               compensation received by Stonegate hereunder. The Company shall
               have no financial liability for any fees or expenses of any such
               Dealers.

16.      CAPTIONS.

         The Section titles herein are for reference purposes only and do not
         control or affect the meaning or interpretation of any term or
         provision hereof.

17.      AMENDMENTS.

         No alteration, amendment, change or addition hereto shall be binding or
         effective unless the same is set forth in a writing signed by a duly
         authorized representative of each Party.

18.      PARTIAL INVALIDITY.

         If it is finally determined that any term or provision hereof is
         invalid or unenforceable, (a) the remaining terms and provisions hereof
         shall be unimpaired, and (b) the invalid or unenforceable term or
         provision shall be replaced by a term or provision that is valid and
         enforceable and that comes as close as possible to expressing the
         intention of the invalid or unenforceable term or provision.

19.      ENTIRE AGREEMENT.

         This Agreement embodies the entire agreement and understanding of the
         Parties and supersedes any and all prior agreements, arrangements and
         understandings relating to the matters provided for herein.

20.      COUNTERPARTS.

         This Agreement may be executed in one or more counterparts, each of
         which shall be an original, but all of which together shall be
         considered one and the same agreement.


                                       8

<PAGE>


         IN WITNESS WHEREOF, this Agreement has been executed as of the date
first written above by duly authorized representatives of the Company and
Stonegate.

                                             VERDISYS, INC.


                                             By: /s/ Andrew Wilson
                                             Title: Chief Financial Officer




                                             STONEGATE SECURITIES, INC.


                                             By: /s/ Scott Griffith
                                             Title: President


                                       9

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.12
<SEQUENCE>15
<FILENAME>h10836aexv10w12.txt
<DESCRIPTION>2003 STOCK OPTION PLAN
<TEXT>
<PAGE>
                                                                   EXHIBIT 10.12

                                 VERDISYS, INC.

                             2003 STOCK OPTION PLAN

      1. PURPOSES OF THE PLAN. The purposes of this Stock Option Plan are to
attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees, Directors and
Consultants and to promote the success of the Company's business. Options
granted under the Plan may be Incentive Stock Options or Nonstatutory Stock
Options, as determined by the Administrator at the time of grant.

      2. DEFINITIONS. As used herein, the following definitions shall apply:

            (a) "Administrator" means the Board or any of its Committees as
      shall be administering the Plan in accordance with Section 4 hereof.

            (b) "Applicable Laws" means the requirements relating to the
      administration of stock option plans under U.S. state corporate laws, U.S.
      federal and state securities laws, the Code, any stock exchange or
      quotation system on which the Common Stock is listed or quoted and the
      applicable laws of any other country or jurisdiction where Options are
      granted under the Plan.

            (c) "Board" means the Board of Directors of the Company.

            (d) "Cause" means a termination of employment for good cause, as
      determined by the Administrator in its sole and absolute discretion.
      Examples include, but are not limited to, poor performance, dishonesty,
      violation of Company policy, procedures or rules, excessive absenteeism,
      excessive tardiness, insubordination, misconduct, or the unauthorized use
      or disclosure of confidential information or trade secrets of the Company.

            (e) "Change in Control" means the occurrence of any of the following
      events:

                  (i) The consummation of the sale or disposition by the Company
            of all or substantially all of the Company's assets; or

                  (ii) The consummation of a merger or consolidation of the
            Company with any other corporation or business entity, other than a
            merger or consolidation which would result in the voting securities
            of the Company outstanding immediately prior thereto continuing to
            represent (either by remaining outstanding or by being converted
            into voting securities of the surviving entity or its parent) at
            least fifty percent (50%) of the total voting power represented by
            the voting securities of the Company or such surviving entity or its
            parent outstanding immediately after such merger or consolidation.

            (f) "Code" means the Internal Revenue Code of 1986, as amended.

            (g) "Committee" means a committee of Directors appointed by the
      Board in accordance with Section 4 hereof.
<PAGE>
            (h) "Common Stock" means the Common Stock of the Company.

            (i) "Company" means Verdisys, Inc., a California corporation.

            (j) "Consultant" means any natural person who is engaged by the
      Company or any Parent or Subsidiary to render consulting or advisory
      services to such entity and who satisfies the requirements of subsection
      (c)(1) of Rule 701 under the Securities Act of 1933, as amended.

            (k) "Director" means a member of the Board.

            (l) "Disability" means total and permanent disability as defined in
      Section 22(e)(3) of the Code.

            (m) "Employee" means any person, including officers and Directors,
      employed by the Company or any Parent or Subsidiary of the Company. A
      Service Provider shall not cease to be an Employee in the case of (i) any
      leave of absence approved by the Company or (ii) transfers between
      locations of the Company or between the Company, its Parent, any
      Subsidiary, or any successor. For purposes of Incentive Stock Options, no
      such leave may exceed ninety (90) days, unless reemployment upon
      expiration of such leave is guaranteed by statute or contract. If
      reemployment upon expiration of a leave of absence approved by the Company
      is not so guaranteed, then three (3) months following the 91st day of such
      leave, any Incentive Stock Option held by the Optionee shall cease to be
      treated as an Incentive Stock Option and shall be treated for tax purposes
      as a Nonstatutory Stock Option. Neither service as a Director nor payment
      of a director's fee by the Company shall be sufficient to constitute
      "employment" by the Company.

            (n) "Exchange Act" means the Securities Exchange Act of 1934, as
      amended.

            (o) "Fair Market Value" means, as of any date, the value of Common
      Stock determined as follows:

                  (i) If the Common Stock is listed on any established stock
            exchange or a national market system, including without limitation
            the Nasdaq National Market or The Nasdaq SmallCap Market of The
            Nasdaq Stock Market, its Fair Market Value shall be the closing
            sales price for such stock (or the closing bid, if no sales were
            reported) as quoted on such exchange or system on the day of
            determination, as reported in The Wall Street Journal or such other
            source as the Administrator deems reliable;

                  (ii) If the Common Stock is regularly quoted by a recognized
            securities dealer but selling prices are not reported, its Fair
            Market Value shall be the mean between the high bid and low asked
            prices for the Common Stock on the day of determination; or

                  (iii) In the absence of an established market for the Common
            Stock, the Fair Market Value thereof shall be determined in good
            faith by the Administrator.

            (p) "Incentive Stock Option" means an Option intended to qualify as
      an incentive stock option within the meaning of Section 422 of the Code.

                                      -2-
<PAGE>
            (q) "Nonstatutory Stock Option" means an Option not intended to
      qualify as an Incentive Stock Option.

            (r) "Option" means a stock option granted pursuant to the Plan.

            (s) "Option Agreement" means a written or electronic agreement
      between the Company and an Optionee evidencing the terms and conditions of
      an individual Option grant. The Option Agreement is subject to the terms
      and conditions of the Plan.

            (t) "Optioned Stock" means the Common Stock subject to an Option.

            (u) "Optionee" means the holder of an outstanding Option granted
      under the Plan.

            (v) "Parent" means a "parent corporation," whether now or hereafter
      existing, as defined in Section 424(e) of the Code.

            (w) "Plan" means this 2003 Stock Option Plan.

            (x) "Service Provider" means an Employee, Director or Consultant.

            (y) "Share" means a share of the Common Stock, as adjusted in
      accordance with Section 12 below.

            (z) "Subsidiary" means a "subsidiary corporation," whether now or
      hereafter existing, as defined in Section 424(f) of the Code.

      3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 12 of
the Plan, the maximum aggregate number of Shares that may be subject to option
and sold under the Plan is 8,000,000 Shares. The Shares may be authorized but
unissued, or reacquired Common Stock.

      If an Option expires or becomes unexercisable without having been
exercised in full, the unpurchased Shares which were subject thereto shall
become available for future grant or sale under the Plan (unless the Plan has
terminated). However, Shares that have actually been issued under the Plan, upon
exercise of an Option, shall not be returned to the Plan and shall not become
available for future distribution under the Plan, except that if Shares of
restricted stock issued pursuant to an Option are repurchased by the Company at
their original purchase price, such Shares shall become available for future
grant under the Plan.

      4. ADMINISTRATION OF THE PLAN.

            (a) Administrator. The Plan shall be administered by the Board or a
      Committee appointed by the Board, which Committee shall be constituted to
      comply with Applicable Laws.

            (b) Powers of the Administrator. Subject to the provisions of the
      Plan and, in the case of a Committee, the specific duties delegated by the
      Board to such Committee, and subject to the approval of any relevant
      authorities, the Administrator shall have the authority in its discretion:

                  (i) to determine the Fair Market Value;

                                      -3-
<PAGE>
                  (ii) to select the Service Providers to whom Options may from
            time to time be granted hereunder;

                  (iii) to determine the number of Shares to be covered by each
            such Option granted hereunder;

                  (iv) to approve forms of agreement for use under the Plan;

                  (v) to determine the terms and conditions of any Option
            granted hereunder. Such terms and conditions include, but are not
            limited to, the exercise price, the time or times when Options may
            be exercised (which may be based on performance criteria), any
            vesting acceleration or waiver of forfeiture restrictions, and any
            restriction or limitation regarding any Option or the Common Stock
            relating thereto, based in each case on such factors as the
            Administrator, in its sole discretion, shall determine;

                  (vi) to prescribe, amend and rescind rules and regulations
            relating to the Plan, including rules and regulations relating to
            sub-plans established for the purpose of satisfying applicable
            foreign laws;

                  (vii) to allow Optionees to satisfy withholding tax
            obligations by electing to have the Company withhold from the Shares
            to be issued upon exercise of an Option that number of Shares having
            a Fair Market Value equal to the minimum amount required to be
            withheld. The Fair Market Value of the Shares to be withheld shall
            be determined on the date that the amount of tax to be withheld is
            to be determined. All elections by Optionees to have Shares withheld
            for this purpose shall be made in such form and under such
            conditions as the Administrator may deem necessary or advisable; and

                  (viii) to construe and interpret the terms of the Plan and
            Options granted pursuant to the Plan.

            (c) Effect of Administrator's Decision. All decisions,
      determinations and interpretations of the Administrator shall be final and
      binding on all Optionees.

      5. ELIGIBILITY. Nonstatutory Stock Options may be granted to Service
Providers. Incentive Stock Options may be granted only to Employees.

      6. LIMITATIONS.

            (a) Incentive Stock Option Limit. Each Option shall be designated in
      the Option Agreement as either an Incentive Stock Option or a Nonstatutory
      Stock Option. However, notwithstanding such designation, to the extent
      that the aggregate Fair Market Value of the Shares with respect to which
      Incentive Stock Options are exercisable for the first time by the Optionee
      during any calendar year (under all plans of the Company and any Parent or
      Subsidiary) exceeds $100,000, such Options shall be treated as
      Nonstatutory Stock Options. For purposes of this Section 6(a), Incentive
      Stock Options shall be taken into account in the order in which they were
      granted. The Fair Market Value of the Shares shall be determined as of the
      time the Option with respect to such Shares is granted.

                                      -4-
<PAGE>
            (b) At-Will Employment. Neither the Plan nor any Option shall confer
      upon any Optionee any right with respect to continuing the Optionee's
      relationship as a Service Provider with the Company, nor shall it
      interfere in any way with his or her right or the Company's right to
      terminate such relationship at any time, with or without cause, and with
      or without notice.

      7. TERM OF PLAN. Subject to stockholder approval in accordance with
Section 18, the Plan shall become effective upon its adoption by the Board.
Unless sooner terminated under Section 14, it shall continue in effect for a
term of ten (10) years from the later of (i) the effective date of the Plan, or
(ii) the date of the most recent Board approval of an increase in the number of
shares reserved for issuance under the Plan.

      8. TERM OF OPTION. The term of each Option shall be stated in the Option
Agreement; provided, however, that the term shall be no more than ten (10) years
from the date of grant thereof. In the case of an Incentive Stock Option granted
to an Optionee who, at the time the Option is granted, owns stock representing
more than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the term of the Option shall be five (5)
years from the date of grant or such shorter term as may be provided in the
Option Agreement.

      9. OPTION EXERCISE PRICE AND CONSIDERATION.

            (a) Exercise Price. The per share exercise price for the Shares to
      be issued upon exercise of an Option shall be such price as is determined
      by the Administrator, but shall be subject to the following:

                  (i) In the case of an Incentive Stock Option

                        (A) granted to an Employee who, at the time of grant of
                  such Option, owns stock representing more than ten percent
                  (10%) of the voting power of all classes of stock of the
                  Company or any Parent or Subsidiary, the exercise price shall
                  be no less than 110% of the Fair Market Value per Share on the
                  date of grant.

                        (B) granted to any other Employee, the per Share
                  exercise price shall be no less than 100% of the Fair Market
                  Value per Share on the date of grant.

                  (ii) In the case of a Nonstatutory Stock Option

                        (A) granted to a Service Provider who, at the time of
                  grant of such Option, owns stock representing more than ten
                  percent (10%) of the voting power of all classes of stock of
                  the Company or any Parent or Subsidiary, the exercise price
                  shall be no less than 110% of the Fair Market Value per Share
                  on the date of grant.

                        (B) granted to any other Service Provider, the per Share
                  exercise price shall be no less than 85% of the Fair Market
                  Value per Share on the date of grant.

                  (iii) Notwithstanding the foregoing, Options may be granted
            with a per Share exercise price other than as required above
            pursuant to a merger or other corporate transaction.

                                      -5-
<PAGE>
            (b) Forms of Consideration. The consideration to be paid for the
      Shares to be issued upon exercise of an Option, including the method of
      payment, shall be determined by the Administrator (and, in the case of an
      Incentive Stock Option, shall be determined at the time of grant). Such
      consideration may consist of, without limitation, (1) cash, (2) check, (3)
      promissory note, or (4) any combination of the foregoing methods of
      payment. In making its determination as to the type of consideration to
      accept, the Administrator shall consider if acceptance of such
      consideration may be reasonably expected to benefit the Company.
      Notwithstanding the foregoing, the Administrator may permit an Optionee to
      exercise his or her Option by delivery of a full-recourse promissory note
      secured by the purchased Shares. The terms of such promissory note shall
      be determined by the Administrator in its sole discretion.

      10. EXERCISE OF OPTION.

            (a) Procedure for Exercise; Rights as a Stockholder. Any Option
      granted hereunder shall be exercisable according to the terms hereof at
      such times and under such conditions as determined by the Administrator
      and set forth in the Option Agreement. Except in the case of Options
      granted to officers, Directors and Consultants, Options shall become
      exercisable at a rate of no less than 20% per year over five (5) years
      from the date the Options are granted. Unless the Administrator provides
      otherwise, vesting of Options granted hereunder to officers and Directors
      shall be suspended during any unpaid leave of absence. An Option may not
      be exercised for a fraction of a Share.

            An Option shall be deemed exercised when the Company receives (i)
      written or electronic notice of exercise (in accordance with the Option
      Agreement) from the person entitled to exercise the Option, and (ii) full
      payment for the Shares with respect to which the Option is exercised. Full
      payment may consist of any consideration and method of payment authorized
      by the Administrator and permitted by the Option Agreement and the Plan.
      Shares issued upon exercise of an Option shall be issued in the name of
      the Optionee or, if requested by the Optionee, in the name of the Optionee
      and his or her spouse. Until the Shares are issued (as evidenced by the
      appropriate entry on the books of the Company or of a duly authorized
      transfer agent of the Company), no right to vote or receive dividends or
      any other rights as a stockholder shall exist with respect to the Shares,
      notwithstanding the exercise of the Option. The Company shall issue (or
      cause to be issued) such Shares promptly after the Option is exercised. No
      adjustment will be made for a dividend or other right for which the record
      date is prior to the date the Shares are issued, except as provided in
      Section 12 of the Plan.

            Exercise of an Option in any manner shall result in a decrease in
      the number of Shares thereafter available, both for purposes of the Plan
      and for sale under the Option, by the number of Shares as to which the
      Option is exercised.

                                      -6-
<PAGE>
            (b) Termination of Relationship as a Service Provider. If an
      Optionee ceases to be a Service Provider, such Optionee may exercise his
      or her Option within thirty (30) days of termination, or such longer
      period of time as specified in the Option Agreement, to the extent that
      the Option is vested on the date of termination (but in no event later
      than the expiration of the term of the Option as set forth in the Option
      Agreement). If, on the date of termination, the Optionee is not vested as
      to his or her entire Option, the Shares covered by the unvested portion of
      the Option shall revert to the Plan. If, after termination, the Optionee
      does not exercise his or her Option within the time specified by the
      Administrator, the Option shall terminate, and the Shares covered by such
      Option shall revert to the Plan.

            (c) Disability of Optionee. If an Optionee ceases to be a Service
      Provider as a result of the Optionee's Disability, the Optionee may
      exercise his or her Option within six (6) months of termination, or such
      longer period of time as specified in the Option Agreement, to the extent
      the Option is vested on the date of termination (but in no event later
      than the expiration of the term of such Option as set forth in the Option
      Agreement). If, on the date of termination, the Optionee is not vested as
      to his or her entire Option, the Shares covered by the unvested portion of
      the Option shall revert to the Plan. If, after termination, the Optionee
      does not exercise his or her Option within the time specified herein, the
      Option shall terminate, and the Shares covered by such Option shall revert
      to the Plan.

            (d) Death of Optionee. If an Optionee dies while a Service Provider,
      the Option may be exercised within six (6) months following Optionee's
      death, or such longer period of time as specified in the Option Agreement,
      to the extent that the Option is vested on the date of death (but in no
      event later than the expiration of the term of such Option as set forth in
      the Option Agreement) by the Optionee's designated beneficiary, provided
      such beneficiary has been designated prior to Optionee's death in a form
      acceptable to the Administrator. If no such beneficiary has been
      designated by the Optionee, then such Option may be exercised by the
      personal representative of the Optionee's estate or by the person(s) to
      whom the Option is transferred pursuant to the Optionee's will or in
      accordance with the laws of descent and distribution. If, at the time of
      death, the Optionee is not vested as to his or her entire Option, the
      Shares covered by the unvested portion of the Option shall immediately
      revert to the Plan. If the Option is not so exercised within the time
      specified herein, the Option shall terminate, and the Shares covered by
      such Option shall revert to the Plan.

      11. LIMITED TRANSFERABILITY OF OPTIONS. Unless determined otherwise by the
Administrator, Options may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or the laws of
descent and distribution, and may be exercised during the lifetime of the
Optionee, only by the Optionee. If the Administrator in its sole discretion
makes an Option transferable, such Option may only be transferred by (i) will,
(ii) the laws of descent and distribution, (iii) instrument to an inter vivos or
testamentary trust in which the Option is to be passed to beneficiaries upon the
death of the Optionee, or (iv) gift to a member of Optionee's immediate family
(as such term is defined in Rule 16a-1(e) of the Exchange Act). In addition, any
transferable Option shall contain additional terms and conditions as the
Administrator deems appropriate.

                                      -7-
<PAGE>
      12. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, MERGER OR CHANGE IN
CONTROL.

            (a) Changes in Capitalization. Subject to any required action by the
      stockholders of the Company, the number and type of Shares which have been
      authorized for issuance under the Plan but as to which no Options have yet
      been granted or which have been returned to the Plan upon cancellation or
      expiration of an Option, and the number and type of Shares covered by each
      outstanding Option, as well as the price per Share covered by each such
      outstanding Option, shall be proportionately adjusted for any increase or
      decrease in the number or type of issued Shares resulting from a stock
      split, reverse stock split, stock dividend, combination or
      reclassification of the Common Stock, or any other increase or decrease in
      the number of issued shares of Common Stock effected without receipt of
      consideration by the Company. The conversion of any convertible securities
      of the Company shall not be deemed to have been "effected without receipt
      of consideration." Such adjustment shall be made by the Board, whose
      determination in that respect shall be final, binding and conclusive.
      Except as expressly provided herein, no issuance by the Company of shares
      of stock of any class, or securities convertible into shares of stock of
      any class, shall affect, and no adjustment by reason thereof shall be made
      with respect to, the number, type or price of Shares subject to an Option.

            (b) Dissolution or Liquidation. In the event of the proposed
      dissolution or liquidation of the Company, the Administrator shall notify
      each Optionee as soon as practicable prior to the effective date of such
      proposed transaction. The Administrator in its discretion may provide for
      an Optionee to have the right to exercise his or her Option until fifteen
      (15) days prior to such transaction as to all of the Optioned Stock
      covered thereby, including Shares as to which the Option would not
      otherwise be exercisable. In addition, the Administrator may provide that
      any Company repurchase option applicable to any Shares purchased upon
      exercise of an Option shall lapse as to all such Shares, provided the
      proposed dissolution or liquidation takes place at the time and in the
      manner contemplated. To the extent it has not been previously exercised,
      an Option will terminate immediately prior to the consummation of such
      proposed action.

            (c) Merger or Change in Control. In the event of a merger of the
      Company with or into another corporation, or a Change in Control, each
      outstanding Option shall be assumed or an equivalent option substituted by
      the successor corporation or a Parent or Subsidiary of the successor
      corporation. If, in such event, the Option is not assumed or substituted,
      the Optionee shall fully vest in and have the right to exercise the Option
      as to all of the Optioned Stock, including Shares as to which it would not
      otherwise be vested or exercisable. If an Option becomes fully vested and
      exercisable in lieu of assumption or substitution in the event of a merger
      or sale of assets, the Administrator shall notify the Optionee in writing
      or electronically that the Option shall be fully vested and exercisable
      for a period of fifteen (15) days from the date of such notice, and the
      Option shall terminate upon the expiration of such period. For the
      purposes of this paragraph, the Option shall be considered assumed if,
      following the merger or Change in Control, the Option confers the right to
      purchase or receive, for each Share of Optioned Stock subject to the
      Option immediately prior to the merger or Change in Control, the
      consideration (whether stock, cash, or other securities or property)
      received in the merger or Change in Control by holders of Common Stock for
      each Share held on the effective date of the transaction (and if holders
      were offered a choice of consideration, the type of consideration chosen
      by the holders of a majority of the outstanding Shares); provided,
      however, that if such consideration received in the merger or Change in
      Control is not solely common stock of the successor corporation or its
      Parent, the Administrator may, with the

                                      -8-
<PAGE>
      consent of the successor corporation, provide for the consideration to be
      received upon the exercise of the Option, for each Share of Optioned Stock
      subject to the Option, to be solely common stock of the successor
      corporation or its Parent equal in fair market value to the per share
      consideration received by holders of common stock in the merger or Change
      in Control. If an Optionee is terminated (other than a voluntary
      termination or a termination for Cause) within two (2) months prior to or
      twenty-four (24) months following a merger or Change in Control, the
      Optionee shall fully vest in and have the right to exercise the Option as
      to all of the Optioned Stock, including Shares as to which it would not
      otherwise be vested or exercisable.

      13. TIME OF GRANTING OPTIONS. The date of grant of an Option shall, for
all purposes, be the date on which the Administrator makes the determination
granting such Option, or such later date as is determined by the Administrator.
Notice of the determination shall be given to each Service Provider to whom an
Option is so granted within a reasonable time after the date of such grant.

      14. AMENDMENT AND TERMINATION OF THE PLAN.

            (a) Amendment and Termination. The Board may at any time amend,
      alter, suspend or terminate the Plan.

            (b) Stockholder Approval. The Board shall obtain stockholder
      approval of any Plan amendment to the extent necessary and desirable to
      comply with Applicable Laws.

            (c) Effect of Amendment or Termination. No amendment, alteration,
      suspension or termination of the Plan shall impair the rights of any
      Optionee, unless mutually agreed otherwise between the Optionee and the
      Administrator, which agreement must be in writing and signed by the
      Optionee and the Company. Termination of the Plan shall not affect the
      Administrator's ability to exercise the powers granted to it hereunder
      with respect to Options granted under the Plan prior to the date of such
      termination.

      15. CONDITIONS UPON ISSUANCE OF SHARES.

            (a) Legal Compliance. Shares shall not be issued pursuant to the
      exercise of an Option unless the exercise of such Option and the issuance
      and delivery of such Shares shall comply with Applicable Laws and shall be
      further subject to the approval of counsel for the Company with respect to
      such compliance.

            (b) Investment Representations. As a condition to the exercise of an
      Option, the Administrator may require the person exercising such Option to
      represent and warrant at the time of any such exercise that the Shares are
      being purchased only for investment and without any present intention to
      sell or distribute such Shares if, in the opinion of counsel for the
      Company, such a representation is required.

      16. INABILITY TO OBTAIN AUTHORITY. The inability of the Company to obtain
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company's counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, shall relieve the Company of any liability in respect
of the failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained.

                                      -9-
<PAGE>
      17. RESERVATION OF SHARES. The Company, during the term of this Plan,
shall at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.

      18. STOCKHOLDER APPROVAL. Any stockholder approval shall be obtained in
the degree and manner required under applicable laws.

      19. INFORMATION TO OPTIONEES. The Company shall provide informationin the
degree and manner required under applicable laws..

                                      -10-

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.13
<SEQUENCE>16
<FILENAME>h10836aexv10w13.txt
<DESCRIPTION>INDEPENDENT CONTRACTOR AGREEMENT
<TEXT>
<PAGE>
                                                                   EXHIBIT 10.13



                        INDEPENDENT CONTRACTOR AGREEMENT

         This Independent Contractor Agreement ("Agreement") is made effective
as of this 1st day of August, 2003, by and between VERDISYS, INC., a California
corporation ("Verdisys") and TERRONNE PETROLEUM CORPORATION ("Contractor").

             1. Services Compensation.

                  (a) Commencement of Services. Verdisys agrees to contract for
         the Services of Contractor (as defined below), and Contractor agrees to
         provide the Services to Verdisys on the terms and conditions set forth
         in this Agreement. Contractor agrees to devote such time as Contractor
         deems necessary to carry out the Services contemplated hereunder. In
         the performance of the Services contemplated herein, Contractor is
         acting as an independent contractor with the authority to control and
         direct the performance of' the details of the Services, Verdisys being
         interested only in the results obtained. However, the Services
         contemplated herein must meet the approval of Verdisys and shall be
         subject to its general right of inspection and supervision to secure
         the satisfactory completion thereof.

                  (b) Description of Services. Contractor shall perform oil
         field management services for Verdisys, Inc. on all of Verdisys' oil
         and natural gas fields located in Monroe, Louisiana (the "Services").

                  (c) Compensation. Contractor will be paid Fourteen Thousand
         Dollars ($14,000.00) per month for its performance of the Services.
         Contractor shall invoice Verdisys monthly for services provided during
         the preceding month. Verdisys shall pay Contractor net thirty (30) days
         from the date of receipt of each invoice.

                  (d) Expense Reimbursement: Contractor will not be reimbursed
         for expenses incurred by Contractor on behalf of Verdisys, unless
         Contractor receives prior written consent from an officer of Verdisys.
         The expense reimbursement must be supported by documents and/or
         receipts.

                  (e) Performance of Services. Contractor hereby represents
         that:

                           (i) the Services performed by Contractor shall be in
         conformity with all applicable laws, codes, and/or ordinances;

                           (ii) Contractor shall supply all tools, equipment
         and/or materials necessary to perform the Services; and

                           (iii) Contractor has workers compensation insurance
         for all individuals providing the Services on behalf of Contractor or
         that Contractor is exempt from the requirements of workers compensation
         insurance. Contractor agrees to provide certificates evidencing such
         issuance or such exception upon the request of the Verdisys.

             2. Term and Termination. Performance of the services shall commence
         August 1, 2003 and continue month to month. Contractor's engagement as
         an


<PAGE>

         independent contractor shall be "at will." This means that Contractor
         or Verdisys, without notice, may terminate this Agreement for any
         reason or no reason at all, provided that the reason is not otherwise
         in violation of the law.

             3. Trade Secrets. Contractor shall not at any time disclose, or
         himself use, other than in the performance of his duties under this
         Agreement, any confidential information, trade secrets or property of
         Verdisys and/or affiliates of Verdisys whether or not acquired or
         conceived by Contractor. Contractor hereby acknowledges that such
         confidential information, trade secrets and property are secret,
         confidential and unique; that they constitute the exclusive trade
         secrets and property of Verdisys and/or affiliates of Verdisys; that
         such trade secrets and property will be made known to Contractor in
         confidence in connection with the performance of the Services to be
         provided by Contractor hereunder; and that any use of such trade
         secrets or property by Contractor other than for the sole and exclusive
         benefit of Verdisys and/or affiliates of Verdisys would be wrongful and
         would cause irreparable harm to Verdisys and/or affiliates of Verdisys.
         The provisions of this paragraph shall survive the termination of this
         Agreement.

             4. Indemnification. Contractor hereby agrees to indemnify, defend
         and hold Verdisys harmless for any damage, injury or other loss, to
         either property or person, resulting from Contractor's performance of
         the Services required hereunder. The provisions of this paragraph shall
         survive the termination of this Agreement.

             5. Relationship of Parties. The parties confirm their intent that
         Contractor's Services are retained only for the purposes and to the
         extent set forth in this Agreement. Contractor's relationship with
         Verdisys shall be and remain that of an independent contractor and not
         that of an employee. Verdisys is interested only in the results to be
         achieved, and the conduct, control, and management of the Services to
         be provided will lie solely with Contractor. Contractor is not to be
         considered an agent or employee of Verdisys for any purpose, and any
         employees of Contractor are not to be entitled to any of the benefits
         that Verdisys provides for its employees. It is further understood that
         Contractor is free to perform Services for others while under contract
         with Verdisys. Contractor shall not represent or hold itself out to be
         an employee of Verdisys. Contractor does not possess the authority to
         bind Verdisys in any agreements without the express prior written
         consent of Verdisys.

             6. General Provisions.

                  (a) Notices. All notices or other communications required or
         permitted under this Agreement shall be in writing and shall be
         personally delivered, delivered by overnight courier or sent by
         registered or certified mail, return receipt requested and postage
         prepaid; to the following addresses (or to such other addresses as a
         party may give to the other by notice from time to time):

If to Verdisys:                                If to Contractor:

Verdisys, Inc.                                 TerrOnne Petroleum Corporation
201 Tipperary Lane                             2225 Liberty Street
Alameda, CA 94502                              Monroe, LA 71201
Attention: Andrew Wilson, CFO                  Attention: Don Pilgreen


<PAGE>

Personally delivered notices shall be effective upon delivery. Notices by mail
shall be effective as of the earlier of the date of actual receipt or 72 hours
after the date of mailing in the manner described above.

                  (b) Attorneys' Fees. In the event of the bringing of any
         action or suit by either party hereto against the other party hereunder
         alleging a breach of any of the covenants, conditions, agreements or
         provisions of this Agreement, the prevailing party shall recover all
         costs and expenses of suit, including reasonable attorneys' fees and
         fees of expert witnesses.

                  (c) Assignment. Contractor's rights and obligations under this
         Agreement may "not be assigned or transferred without the prior written
         consent of Verdisys, which consent may be withheld for any reason.

                  (d) Waiver. Either party's failure to enforce any provision of
         this Agreement, shall not in any way be construed as a waiver of any
         such provision, or prevent that party thereafter from enforcing each
         and every other provision of this Agreement.

                  (e) Withholding. Contractor agrees to assume full
         responsibility for payment of all sums required for Social Security,
         self employment withholding taxes and for any other federal, state or
         local tax or charge which may now be in effect or hereafter enacted or
         required as a charge on the compensation received by Contractor under
         this Agreement. No part of Contractor's compensation will be subject to
         withholding by Verdisys for the payment of any social security,
         federal, state or any other employee payroll taxes. Verdisys will
         regularly report amounts paid to Contractor by filing Form 1099-MISC
         with the Internal Revenue Service as required by law.

                  (f) Entire Agreement. This Agreement contains the entire
         agreement between tile parties hereto with respect to the subject
         matter hereof, and no change, modification, alteration or extension of
         this Agreement shall be valid except when it is made in writing and
         duly signed by both of the parties hereto. This Agreement supersedes
         any and all previous arrangements and Agreements, written or oral,
         express or implied, if any, which may have been entered in to by and
         between the parties hereto with respect to the subject matter of this
         Agreement and any and all such previous arrangements and agreements, if
         any, are hereby cancelled and terminated in all respects.

                  (g) Governing Law. This Agreement shall be governed by and
         construed in accordance with the Laws of Texas.

                  (h) Venue. In the event of any litigation hereunder, any such
         action shall he brought in a state or federal court of competent
         jurisdiction located in ____________ County, Texas.


<PAGE>

                  (i) Time of Essence. Time is of the essence of each and every
         term, condition, obligation and provision hereof.

                  (j) Counterparts. This Agreement may be executed in
         counterparts, each of which shall be deemed an original, but all of
         which, together, shall constitute one and the same instrument. A party
         may execute this Agreement and transmit its signature by facsimile,
         which shall be fully binding, and the party taking such actions shall
         deliver a manually signed original as soon as is practicable.

                  (k) Headings. Headings at the beginning of each paragraph and
         subparagraph are solely for the convenience of the parties and are not
         part of this Agreement.

                  (l) Construction. Whenever the context of this Agreement
         requires the same, the singular shall include the plural and the
         masculine shall include the feminine. This Agreement. shall not be
         construed as if it had been prepared by one of the parties, but rather
         as if both parties had prepared the same. Unless otherwise indicated,
         all references to paragraphs and subparagraphs are to this Agreement.
         In the event the day on which Verdisys or Contractor is required to
         take any action under the terms of this Agreement is not a business
         day, the action shall be taken on the next succeeding business day.

         IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the day and year first above written.


                                        "Verdisys"
                                        Verdisys, Inc., a California corporation


                                        By:
                                           -------------------------------------
                                           Dan Williams, CEO



                                        "Contractor"

                                        TerrOnne Petroleum Corporation


                                        By:
                                           -------------------------------------
                                           Don Pilgreen, President


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.14
<SEQUENCE>17
<FILENAME>h10836aexv10w14.txt
<DESCRIPTION>ADDENDUM TO CONTRACT - EDGE CAPITAL GROUP
<TEXT>
<PAGE>
                                                                   EXHIBIT 10.14


                               AMENDMENT NUMBER 1

                                       TO

                              OPERATIONS AGREEMENT

LATERAL DRILLING SERVICE STANDARD AGREEMENT

                      EDGE CAPITAL GROUP AND VERDISYS, INC.

This AMENDMENT NUMBER 1 TO THE ORIGINAL AGREEMENT dated June 16, 2003,
("Amendment") is entered by and between Verdisys, Inc., a California corporation
("Verdisys"), and Edge Capital Group, a California corporation ("ECG") Edge
Capital Group ("ECG") engaged Verdisys, Inc. ("Verdisys") to provide operating
expertise, and lateral drilling services, to ECG's in the Monroe Gas Field in
Monroe, Louisiana (the "Monroe Field"), which ECG has acquired.

WHEREAS, ECG has arranged financing with Solarcom, Inc., however, ECG may
replace the financing with another third party lender as ECG has the financial
capability to secure financing. Whereas, this Amendment retroactively requires
Edge to pay for drilling and related services under Section 2.1 by eliminating
the condition to obtain financing.

NOW, THEREFORE, in consideration of the rights, obligations and interests
included under this Agreement, both parties agree as follows:

2.0 SERVICE FEES AND ROYALTY

2.1 LATERAL DRILLING SERVICE FEES

Service Contract - ECG and Verdisys, Inc.

1

- --------------------------------------------------------------------------------



<PAGE>
Verdisys Lateral Drilling Services ("Drilling Services") will be billed at the
time of commencement of drilling at the package rate set forth in the Term and
Pricing Invoice (Addendum "B"). The Drilling Services are for each individual
well site pertaining to this Contract. ECG shall receive the initial Drilling
Services for eight (8) wells. Payment to Verdisys shall occur approximately
thirty days later. Thereafter, additional funding to Verdisys will be supplied
for a minimum of wells equal to the lesser of either: (i) eight (8) wells at a
time, or (ii) in the event that the projected number of laterals to be drilled
per well would cause the cost of 8 wells to exceed an aggregate payment of
$500,000.00, then that maximum number of wells which would be as close to, but
not in excess of $500,000.00.

3.0 RESPONSIBILITIES OF PARTIES

3.2 THIRD PARTY SERVICES

ECG hereby agrees that to the extent that mutually agreeable third party
services are needed to maximize the results of the Drilling Services or the
overall output from the Monroe field, ECG will be responsible for thirty-three
and one-third percent (331/3%) of all costs related to these services. Third
Party costs are anticipated to not exceed $3,000.00 per well and shall be paid
directly to Verdisys. In the event that the parties can not agree as to whether
certain third party services are necessary to maximize the results of the
Drilling Services, the on-site consulting geologist (or

Service Contract - ECG and Verdisys, Inc.

2

- --------------------------------------------------------------------------------

<PAGE>
if no on-site consulting geologist is present at the site, by any third party
consulting geologist mutually acceptable to the parties) shall make the final
determination as to whether such third party services are necessary to maximize
the results of the Drilling Services.

The determination as to the appropriate number of laterals to be drilled to
obtain maximum return from the well will be made by the on-site consulting
geologist (or if no on-site consulting geologist is present at the site, by any
third party consulting geologist mutually acceptable to the parties).

5.6 AMENDMENTS

This Amendment Number 1 amends the ORIGINAL AGREEMENT dated June 16, 2003.

ECG:                          EDGE CAPITAL GROUP

22349 LA PALMA AVE. SUITE D110

YORBA LINDA, CALIFORNIA 92887

VERDISYS:                     VERDISYS, INC.

                              25025 I-45 NORTH, SUITE 525

                              THE WOODLANDS, TX 77380

5.8 WAIVER

Service Contract - ECG and Verdisys, Inc.

3

- --------------------------------------------------------------------------------

<PAGE>
Any waiver by any party of a breach of any provision of this Agreement shall not
operate as or be construed to be a waiver of any other breach of that provision
or of any breach of any other provision of this Agreement. Any waiver must be in
writing and be authorized by a resolution of the Board of Directors of the
waiving party.

5.9 BINDING EFFECT

The provisions of this Agreement shall be binding upon and inure to the benefit
of the Constituent Corporations and their respective successors and assigns and
shall inure to the benefit of each indemnity.

5.12 COUNTERPARTS

This Amendment may be executed in any number of counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.

IN WITNESS WHEREOF, this Agreement has been approved by resolutions duly adopted
by the Board of Directors of each party and has been signed by duly authorized
officers of each party, all as of the date first above written.

EDGE CAPITAL GROUP


By:     /S/Scott Sossen
   ----------------------------

Title:        CEO
      -------------------------

Date:    June 19, 2003
     --------------------------

VERDISYS, INC.


By:      /s/Dan Williams
   ----------------------------

Title:      President
      -------------------------

Date:     June 19, 2003
     --------------------------

Service Contract - ECG and Verdisys, Inc.

4

- --------------------------------------------------------------------------------




</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.14.1
<SEQUENCE>18
<FILENAME>h10836aexv10w14w1.txt
<DESCRIPTION>LETTER ACKNOWLEDGING AMMOUNTS OWED TO VERDISYS
<TEXT>
<PAGE>
                                                                 EXHIBIT 10.14.1



Letter from Edge Executive


To:  Verdisys

I, Scott Sossen, CEO of Edge Capital, acknowledge that Verdisys, Inc has
performed under the contract dated June 16, 2003 as amended, and I accept the
work performed under the contract through the period ended September 30, 2003. I
acknowledge that Edge Capital owes Verdisys $1,696,000 at September 30, 2003 and
is due and payable. I hereby commit Edge Capital to pay such amount within the
next two weeks.






</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.1
<SEQUENCE>19
<FILENAME>h10836aexv31w1.txt
<DESCRIPTION>CERTIFICATION OF PEO PURSUANT TO SECTION 302
<TEXT>
<PAGE>

                                                                    EXHIBIT 31.1


                                  CERTIFICATION

I, Dan Williams, certify that:

1.  I have reviewed this Amendment No. 1 to the Form 10-QSB/A of Verdisys, Inc.;

2.  Based on my knowledge, this report does not contain any untrue statement of
    a material fact or omit to state a material fact necessary to make the
    statements made, in light of the circumstances under which such statements
    were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial
    information included in this report, fairly present in all material respects
    the financial condition, results of operations and cash flows of the
    registrant as of, and for, the periods presented in this report;

4.  The registrant's other certifying officer(s) and I are responsible for
    establishing and maintaining disclosure controls and procedures (as defined
    in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

    (a) Designed such disclosure controls and procedures, or caused such
        disclosure controls and procedures to be designed under our supervision,
        to ensure that material information relating to the registrant,
        including its consolidated subsidiaries, is made known to us by others
        within those entities, particularly during the period in which this
        report is being prepared;

    (b) Evaluated the effectiveness of the registrant's disclosure controls and
        procedures and presented in this report our conclusions about the
        effectiveness of the disclosure controls and procedures, as of the end
        of the period covered by this report based on such evaluation; and

    (c) Disclosed in this report any change in the registrant's internal control
        over financial reporting that occurred during the registrant's most
        recent fiscal quarter that has materially affected, or is reasonably
        likely to materially affect, the registrant's internal control over
        financial reporting; and

5.  The registrant's other certifying officer(s) and I have disclosed, based on
    our most recent evaluation of internal control over financial reporting, to
    the registrant's auditors and the audit committee of registrant's board of
    directors (or persons performing the equivalent functions):

    (a) All significant deficiencies and material weakness in the design or
        operation of internal control over financial reporting which are
        reasonably likely to adversely affect the registrant's ability to
        record, process, summarize and report financial information; and

    (b) Any fraud, whether or not material, that involves management or other
        employees who have a significant role in the registrant's internal
        control over financial reporting.


     Date: November 20, 2003                        /s/ DAN WILLIAMS
                                                    ----------------------------

                                            Name:   Dan Williams
                                            Title:  Principal Executive Officer



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.2
<SEQUENCE>20
<FILENAME>h10836aexv31w2.txt
<DESCRIPTION>CERTIFICATION OF PAO PURSUANT TO SECTION 302
<TEXT>
<PAGE>


                                                                    EXHIBIT 31.2


                                  CERTIFICATION

I, Andrew Wilson, certify that:

1.  I have reviewed this Amendment No. 1 to the Form 10-QSB/A of Verdisys, Inc.;

2.  Based on my knowledge, this report does not contain any untrue statement of
    a material fact or omit to state a material fact necessary to make the
    statements made, in light of the circumstances under which such statements
    were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial
    information included in this report, fairly present in all material respects
    the financial condition, results of operations and cash flows of the
    registrant as of, and for, the periods presented in this report;

4.  The registrant's other certifying officer(s) and I are responsible for
    establishing and maintaining disclosure controls and procedures (as defined
    in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

    (a) Designed such disclosure controls and procedures, or caused such
        disclosure controls and procedures to be designed under our supervision,
        to ensure that material information relating to the registrant,
        including its consolidated subsidiaries, is made known to us by others
        within those entities, particularly during the period in which this
        report is being prepared;

    (b) Evaluated the effectiveness of the registrant's disclosure controls and
        procedures and presented in this report our conclusions about the
        effectiveness of the disclosure controls and procedures, as of the end
        of the period covered by this report based on such evaluation; and

    (c) Disclosed in this report any change in the registrant's internal control
        over financial reporting that occurred during the registrant's most
        recent fiscal quarter that has materially affected, or is reasonably
        likely to materially affect, the registrant's internal control over
        financial reporting; and

5.  The registrant's other certifying officer(s) and I have disclosed, based on
    our most recent evaluation of internal control over financial reporting, to
    the registrant's auditors and the audit committee of registrant's board of
    directors (or persons performing the equivalent functions):

    (a) All significant deficiencies and material weakness in the design or
        operation of internal control over financial reporting which are
        reasonably likely to adversely affect the registrant's ability to
        record, process, summarize and report financial information; and

    (b) Any fraud, whether or not material, that involves management or other
        employees who have a significant role in the registrant's internal
        control over financial reporting.


     Date:        November 20, 2003                 /s/ ANDREW WILSON
                                                    ----------------------------

                                            Name:   Andrew Wilson
                                            Title:  Principal Accounting Officer



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32.1
<SEQUENCE>21
<FILENAME>h10836aexv32w1.txt
<DESCRIPTION>CERTIFICATION OF PEO PURSUANT TO SECTION 906
<TEXT>
<PAGE>

                                                                    EXHIBIT 32.1


                       CERTIFICATION FURNISHED PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

         In connection with this Amendment No. 1 to the Quarterly Report of
Verdisys, Inc. (the "Company") on Form 10-QSB/A for the period ended June 30,
2003, as filed with the Securities and Exchange Commission on the date hereof
(the "Report"), I, Dan Williams, Principal Executive Officer of the Company,
certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, that:

         1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

         2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.

                             /s/ DAN WILLIAMS
                             -----------------------------------
                             Name:   Dan Williams
                             Title:  Principal Executive Officer
                             Date:   November 20, 2003

A signed original of this statement required by Section 906 has been provided to
Verdisys, Inc. and will be retained by Verdisys, Inc. and furnished to the
Securities and Exchange Commission or its staff upon request.



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32.2
<SEQUENCE>22
<FILENAME>h10836aexv32w2.txt
<DESCRIPTION>CERTIFICATION OF PAO PURSUANT TO SECTION 906
<TEXT>
<PAGE>

                                                                    EXHIBIT 32.2


                       CERTIFICATION FURNISHED PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

         In connection with this Amendment No. 1 to the Quarterly Report of
Verdisys, Inc. (the "Company") on Form 10-QSB/A for the period ended June 30,
2003, as filed with the Securities and Exchange Commission on the date hereof
(the "Report"), I, Andrew Wilson, Principal Accounting Officer of the Company,
certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, that:

         1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

         2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.

                             /s/ ANDREW WILSON
                             ------------------------------------
                             Name:   Andrew Wilson
                             Title:  Principal Accounting Officer
                             Date:   November 20, 2003

A signed original of this statement required by Section 906 has been provided to
Verdisys, Inc. and will be retained by Verdisys, Inc. and furnished to the
Securities and Exchange Commission or its staff upon request.



</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
